BUSINESS BEFORE QUESTIONS

Death of a Member

Mr. Speaker: I regret to have to report to the House the death of David Leslie Taylor, Member for North-West Leicestershire. David was a highly assiduous, principled and independent-minded Member who respected the House and was respected by it. Truly, he was a House of Commons man, and I am sure that Members on both sides of the House will join me in mourning the loss of our colleague and in extending our sympathy to his widow Pam, his daughters Rachel, Sarah, Jessica and Catherine, his wider family and his many friends.

ORAL ANSWERS TO QUESTIONS

JUSTICE

The Secretary of State was asked-

Drug Misuse (Prisons)

Philip Davies: What recent steps his Department has taken to reduce the level of drug misuse in prisons.

Shailesh Vara: What steps his Department has taken to reduce the level of drug misuse in prisons.

Ann Winterton: What recent steps have been taken by his Department to reduce the availability of illegal drugs in the prison system.

Maria Eagle: I begin by echoing your views, Mr. Speaker, on behalf of the House, and to say how sorry we are not to see David Taylor in his place today. As well as a valued colleague, he was a magistrate and an assiduous attender of Justice questions. I am sure that he will be missed on both sides of the House.
	Drug misuse in prisons, as measured by random mandatory drug testing, has fallen by 68 per cent. since 1996-97. A comprehensive framework is in place in prisons both to reduce the supply of drugs and to provide drug treatment. Good progress has been made in implementing the Blakey recommendations to improve measures to reduce the supply of drugs in prisons.

Philip Davies: Our proceedings certainly will not be the same without David Taylor, and he will be missed on both sides of the House.
	Given that so many drugs are brought into prison by visitors to prisoners, why do the Government not do more to encourage or make mandatory closed visits behind screens in order to stop drugs being brought into prisons?

Maria Eagle: Visitors are one means by which drugs and other contraband can be brought into prisons. We have a number of ways of making sure that we detect such things-for example, active and passive drugs dogs, random searches and intelligence-based action. We believe that that is the best way of identifying these difficulties. Where there is cause for concern, visits are closed, and they can be restricted in various ways, but it would be difficult, in keeping with our attempts to ensure that prisoners can keep in touch with their families, to impose such restrictions on all prisoners in every circumstance.

Shailesh Vara: May I join colleagues who have expressed their sentiments about David Taylor-a true parliamentarian in every sense of the word?
	With 20,000 prisoners on long-term methadone prescriptions and only 1,000 on an abstinence programme, have the Government got the balance right in their drugs programme in prisons?

Maria Eagle: It is perfectly legitimate to ask whether the balance is correct between methadone maintenance and other forms of treatment designed to cure drug addiction and get people drug-free. It is not the case, however, that all methadone prescription is about maintenance. The only people who get methadone maintenance treatment in prison are those with short sentences that would not allow a proper length of time for detoxification and removing them from drugs. It is important that we have a balance between different types and lengths of drug treatment, and appropriate treatment for each individual. Individuals can have low and high levels of dependency on drugs and we need treatments that will deal with all.

Ann Winterton: In an official report published last October, was it not a positive disgrace that the drugs trade in Wandsworth prison amounted to £1 million a year? Is it not time that, in a secure environment, this trade was stamped on and, as my hon. Friend the Member for North-West Cambridgeshire (Mr. Vara) suggested, longer-term prisoners are enabled to give up their habit completely?

Maria Eagle: I agree that longer-term prisoners should be detoxified and encouraged to become drug-free for life. That is what our policy is aimed at achieving in prisons. We have increased fifteenfold the funding for treatment to get people off drugs in prison over the past 12 years, so there are substantial improvements. It is always difficult to be precise about the value of an illicit trade, but we are implementing policies to prevent illicit drugs from being taken into prison by whatever method. We use drugs dogs and various technologies, including body orifice scanners, which will detect illicit substances being taken into prison. It is a constant fight, but I believe that we are winning it and we have to continue to do so.

John Mann: I cannot think of any section of any business anywhere in my area or elsewhere that is as badly managed as the prisons. What is the Minister doing about poor management in prisons, so that the excellent prison officers can be given more support both in improving their morale and in developing the skills required to recognise and deal more effectively with drugs in prison?

Maria Eagle: I pay tribute this afternoon both to prison officers, who do a difficult and dangerous job, and generally do it well, and to prison managers, who do the same. They are all part of the same team, and I cannot accept my hon. Friend's analysis that one element of our staff is brilliant and the other is not. They are all our staff and they all do a brilliant job.

Paul Flynn: May I add a word of sorrow about the death of David Taylor? He has left us a legacy, through his independence, courage and hard work, that will act as a model for all future Back Benchers.
	My question about prisons relates to the experience of two of my constituents, whom the Prison Service had down as models of behaviour and success. They went in as drug users and emerged clean. Tragically, one of them lived for a week afterwards and the other for just a day. Is not the greatest danger for prisoners the point when they leave prison and go back to their old haunts?

Maria Eagle: My hon. Friend is correct in the sense that there are obvious dangers. Drug abuse and drug dependency tend to have the capacity to produce chronic and repeated relapsing behaviour among those who become dependent on drugs. There is a danger that having been detoxified, there can then be a difficulty, which is why for short-term prisoners who are in prison for only a few weeks methadone maintenance is appropriate. Such treatment can reduce the risk of infection from blood-borne diseases and prevent accidental overdose on release, as well as reducing reoffending. We need to have a wide range of policies that deal with all those issues and proper through-care, from prisons into the community, to make sure that people who come out of prison continue to have appropriate treatment in the community.

Stephen Pound: Further to the question raised by my old sparring partner, the hon. Member for Shipley (Philip Davies)-on whose birthday we congratulate him today-may I tell my hon. Friend that in my experience of prisoners nothing is more calculated and structured to encourage one to take drugs than lying around and doing nothing all day? Will she realise that education in prison is often the best cure for the problems that lead to the taking of drugs in the first place?

Maria Eagle: When my hon. Friend said he had a sparring partner on the Opposition Benches I wondered who on earth it might be.

Stephen Pound: All of them.

Maria Eagle: My hon. Friend is probably right.
	I agree with my hon. Friend that participation in education provision is a tremendously important part of reducing drug taking and reducing reoffending when prisoners come out. Almost 40 per cent. of prisoners now participate in offender learning and skills, and 38 per cent. enter employment on release. That indicates a great level of success-greater than ever before in our prison system.

David Burrowes: Have the Government learned anything from their evaluation last year of the integrated drug treatment system? Senior prison staff criticised the Government's obsession with maintaining opiate users. They were
	"specifically concerned about the cocktail of illegal substances which prisoners may have access to during time in custody which may potentially be used combined with a daily dose of prescribed methadone."
	Is that not a picture of a Government who have lost control of drugs in prisons, and given up on prisons and prisoners becoming drug-free?

Maria Eagle: No, I do not accept that analysis from the hon. Gentleman. It is fair to say that the drug treatment provided in prisons is clinically led under best practice arranged by the National Treatment Agency. It is the same inside prison as it is outside. It is perfectly legitimate for Members and others to question the balance of available treatment. I do not think there is a perfectly correct answer, so it is a good debate to have, but I do not accept in any way that the Government have lost control of drug treatment in prisons.

Voting (Service Personnel)

Michael Fabricant: What steps he is taking to ensure service personnel are able to vote at the next general election; and if he will make a statement.

Michael Wills: May I, too, express my sadness at the tragic loss of David Taylor? His integrity and independence will be much missed.
	If there are any barriers hindering the participation of service voters in elections, we must remove them. To that end, we are introducing new registration awareness campaigns and targeted registration arrangements. We are exploring using supply flights to support postal voting by personnel in Afghanistan. We have set up a working group consisting of officials from the Ministry of Defence, the Ministry of Justice and the Electoral Commission, as well as representatives of the armed forces, to explore further improvements.

Michael Fabricant: Does the Minister agree that democracy needs to be exercised with responsibility? Will he therefore join me in condemning the crass and dreadful plans of Islam4UK to demonstrate against the Afghan war in Wootton Bassett, which would give so much grief and despair to the relatives of the fallen?

Michael Wills: I agree with the hon. Gentleman. Anyone who has attended those repatriation ceremonies, as I have done, will have been humbled by the dignity and respect shown by the people of that town to those who have given their lives in the service of this country. Anything that displays anything other than the utmost sensitivity in such circumstances will, I think, be treated with repugnance by every decent person in this country-including, I should say, all those Muslims who serve so gallantly in our armed services.

Rob Marris: Like you, Mr. Speaker, I shall miss David Taylor, a fellow Back Bencher of the year.
	With reference to service personnel voting, will my right hon. Friend tell me whether any special steps are being taken in relation to the Territorial Army? There are particular issues there, with people being deployed overseas as well these days.

Michael Wills: I thank my hon. Friend for that. We are looking at all service personnel whose deployment might mean that they are not able to exercise the vote to which they are entitled. It is very important that service personnel are registered and that they can exercise their vote. There are logistical problems in some areas of deployment overseas. We are exploring them vigorously and we have set up the working group. We will take every single measure that we can to make sure that service personnel can vote.

Eleanor Laing: The Minister always says that he is concerned about this subject. He has set up a working group, but it is too late. The Government changed the rules nine years ago to make it more difficult for service personnel to vote, and at the last general election 40 per cent. of service personnel were unable to vote. Only 60 per cent. of the people fighting for our country were able to express their democratic opinion. It is too late now. The Minister has come forward with kind words, working parties, promises and letters, but the Government have done nothing to make it easier for service personnel to vote. I am sure that at the coming general election, which we all hope will be soon, the situation will not be any better than it was last time, because the Government have taken no action.

Michael Wills: I would be very happy to answer any question that the hon. Lady might have, but I did not hear one. She is wrong in almost every statement that she made. It is not the case that the Government have done nothing. As she well knows, we have extended the service declaration period from one year to three years, and it is to be extended again to five years. We have taken action already to make sure that our service personnel in Afghanistan are able to have an expedited service of postal voting. The hon. Lady well knows that the proxy vote system is available to every member of the armed services anyway, and we have taken other measures as well. Unlike the Government whom she supported, who for 18 years did nothing whatever to address the issue, we have set up a working group, including representatives of the armed services, to make sure that our armed services are able to vote.

Court Cases

Laurence Robertson: What percentage of cases brought to court were not pursued for administrative reasons in the latest period for which figures are available.

Bridget Prentice: I, too, add my condolences to the family of David Taylor, who was indeed an excellent parliamentarian.
	The court has no power to end cases for administrative reasons. From July to September last year, of the 45,500 magistrates court trials, 44 per cent. went ahead as scheduled, 38 per cent. were cracked-in other words, the defendant pleaded guilty on day one-and 18 per cent. did not go forward for a variety of reasons, the most common being that a witness or victim did not turn up.

Laurence Robertson: In expressing my sadness at the death of Mr. David Taylor, I draw the attention of the House to the excellent work that he did on flood prevention, which is a subject very dear to my heart.
	I thank the Minister for that response, but does she agree that the figures that she gives are alarming? The 18 per cent. of cases which are dropped for whatever reason must represent a huge cost to the court, clog up the courts system and prevent the most serious cases from being considered in a timely manner.

Bridget Prentice: The hon. Gentleman makes a reasonable point: 18 per cent. is still too high. However, that figure of 18 per cent. is significantly down on the percentage seven or eight years ago. The figures then were 23.7 per cent. in the Crown court, down to 13 per cent. in the latest figures, and 31 per cent. in the magistrates courts, down to 18 per cent., as I have just mentioned. We are absolutely committed to reducing those figures further, and good case management is of course part of that process.

Henry Bellingham: Surely the scandal is not just those criminals who escape justice through bureaucratic incompetence, but the cost to the legal aid budget. How much did aborted cases cost the legal aid budget last year? Has not the time come for the incumbent Director of Public Prosecutions to spend less time going around the country attacking Opposition policies and more time doing his day job organising proper prosecutions?

Bridget Prentice: I do not think that it is for me to comment on what the DPP says going around the country; that is a matter for him. If he has concerns about Opposition policies, perhaps it is right that he raises them so that people can then make a proper judgment. However, I say to the hon. Gentleman, again, that bureaucratic reasons do not stop cases going to trial. In the majority of cases, the reason is the unavailability of evidence, because either the victim or the witness does not turn up. That is regrettable, and if we can persuade people to turn up we will ensure that those who are brought to trial for serious criminal offences are dealt with and dealt with seriously.

Southview Probation Hostel

Hugh Bayley: How many residents of Southview probation hostel in York have been returned to prison for (a) breaking the hostel's rules and (b) committing further offences in the last 12 months.

Maria Eagle: In the 12 months up to November 2009, out of the 110 offenders supervised at Southview approved premises, 27 were recalled to prison because their behaviour gave cause for concern and four were convicted of further offences, including one who was convicted of a serious further offence.

Hugh Bayley: It is good to know that hostel residents are returned to prison when they break the rules. My constituents are most concerned about the most dangerous offenders-people such as Richard Graves, who was convicted in November last year for a very serious offence committed while he lived at the hostel. He is now back in prison with an indeterminate sentence. What can the Government do to ensure that the courts make more use of indeterminate sentences so that serial offenders like Mr. Graves are kept in prison rather than in probation hostels?

Maria Eagle: The indeterminate sentence for public protection goes a long way to meeting some of the concerns that my hon. Friend has raised. That particular offender, Richard Graves, was in prison with a determinate sentence under the Criminal Justice Act 1991, and he was released on the last possible day that he could lawfully be held before being sent to approved premises where he was subject to serious licence conditions. He was being very closely supervised at MAPPA level 2, and even so he was able to offend further, as my hon. Friend has said. Mr. Graves will now not be able to leave prison until he can show that he has addressed his offending behaviour, and that is what will improve safety for the public. The fact is that, on his previous offence, he was able to leave prison before he had addressed his offending behaviour.

Anne McIntosh: Does the hon. Member for City of York (Hugh Bayley) not highlight a very real problem with the MAPPA situation-that no one agency takes overall responsibility, that prisoners are not necessarily going to hostels, and that they are being allowed to reoffend? They should not be eligible for early release in those circumstances.

Maria Eagle: That man was not released early; he was released on the last possible day that it would have been lawful to hold him. The question is not about early release. MAPPA stands for multi-agency public protection arrangements, and the whole idea is that all agencies co-operate properly to ensure that somebody always leads in every individual case. The most recent figures indicate that 0.48 per cent. of people supervised under MAPPA level 2 and level 3 reoffended-they committed a serious further offence. That is a low level of reoffending. Obviously, it is a distressing level for those who are subjected to the extra offences, but it is a low level of reoffending given the very high risk of serious harm which those individuals present.

Land Registry (Croydon)

Andrew Pelling: What recent discussions he has had with the senior management of the Land Registry on the closure of its office in Croydon.

Michael Wills: I have recently met those at the Land Registry several times about their transformation programme, which includes the proposed closure of five of their offices, including in Croydon. This programme is intended to put the Land Registry in the best possible position to deliver its services cost-effectively. The consultation is open until 29 January, and all representations will be considered.

Andrew Pelling: Does the Minister appreciate that 57 per cent. of the employees at the very professional Land Registry office in Croydon are aged over 46, which offers the prospect of the loss of a tremendous amount of experience at a time when the Government are expecting the economy to boom and therefore the need for the Land Registry greatly to increase?

Michael Wills: I recognise those arguments. However, the hon. Gentleman may be aware that the transformation programme began in 2006. Of course, its impetus has been accelerated by the decline in the property market, which we all expect to pick up at some point-there is no question about that. What is fundamentally driving the transformation programme is a strategic change in the way that the Land Registry delivers its services in future. That is what lies behind it, not the current state of the property market.

Electoral System

Kelvin Hopkins: If he will make it his policy to retain the current electoral system for elections to the House of Commons.

Jack Straw: David Taylor's death, as has already been indicated, was a profound shock to every Member of this House, to the whole of his constituency and obviously to his family. It is particularly poignant for my hon. Friend the Member for Luton, North (Kelvin Hopkins) and for myself, because we often joined David for dinner in the Members' Dining Room, where I, not least, was a recipient of his robust advice on what we had got right, which was usually a brief part of the conversation, and what we needed to do better, which was quite a lengthy part of the conversation. There has been much reference to his being a Back Bencher. He was a Member of this House following in its most honourable tradition of representing fearlessly his constituents. He will be very sorely missed.
	The Government have repeatedly made it clear that no change in the electoral system for the House of Commons would be made without a decision of the British people in a referendum. We published a comprehensive review of voting systems in January 2008. In his speech at our party's conference in September last year, my right hon. Friend the Prime Minister said that he believed that there should be a referendum early in the next Parliament on whether to move to the alternative vote system for elections to the Commons, and we are giving consideration to how this can best be put into effect.

Kelvin Hopkins: May I say that I, too, am terribly shocked by my friend David Taylor's death? He was not just a colleague here but also a true socialist, and, I may say, a fellow native of Leicestershire too. I miss him greatly.
	Does my right hon. Friend accept that the existing electoral system not only maintains the strongest possible link between individual voters and their Member of Parliament, but makes for the maximum possibility of electors choosing their Government, and not leaving it to post-election dodgy deals between parties?

Jack Straw: That is one of the many merits of the single-Member constituency majoritarian system, and it is one of the reasons that has always led me wholly to oppose proportional representation, which is essentially a deceit on an electorate because manifestos have no value and the real manifesto is the subject of brokering after any election. That said, my hon. Friend will know that the alternative vote is also a majoritarian system. What we are talking about is a referendum in which there would be a great debate about which of two majoritarian systems would be most appropriate for this century.

Nicholas Winterton: David Taylor was a personal friend, and although he and I differed dramatically in politics, I admired him for his independence and his courage. Is the Secretary of State aware that if we move away from the present system of election to this House, the likes of David Taylor will become fewer and fewer in this House, and that is a reason why we should stick with first past the post?

Jack Straw: I understand the point that the hon. Gentleman makes about the dangers of proportional systems. However, the Australian federal system uses a system of alternative voting, and there is no evidence that members of the Australian federal Parliament lack independence or readiness to speak their mind.

Parmjit Dhanda: May I join everybody else in all parts of the House in expressing sorrow at the passing of David Taylor? He was a good friend and had many warm things to say over the years, and we will miss him.
	Regardless of the electoral system, the votes will need to be counted. Does my right hon. Friend agree that the best way to count them in this country, as traditionally we always have, is on election night rather than on a subsequent day?

Jack Straw: Yes. I have made very clear our preference for vote counting to take place on election night, and there has been correspondence between myself and the chairman of the Conservative party on that issue. By law it is a matter for returning officers to decide on, but we believe that there is no good reason in the vast majority of cases why counting cannot take place on election night as it has in the past. The reason-cum-excuse that has been offered is the need to verify postal votes. We all accept that need, but good returning officers are showing that they can do the necessary verification before the close of the count in respect of the vast majority of postal votes, not afterwards.

David Howarth: May I add my own personal sadness at the death of David Taylor? He was always here, he always had something interesting to say, and he was unfailingly kind and courteous. He will be very greatly missed.
	Will the Secretary of State not acknowledge that first past the post has led to a series of Governments with big majorities in this House, but with barely more than a third of the vote? It is entirely possible that we will get another one this year. How does it help to restore public confidence in politics at this time of all times to have, over and over again, a governing party with very little support in the country, with the vast majority of the electorate having rejected that party at the election?

Jack Straw: It is a feature of majoritarian systems, and always has been, that it is rare for there to be an absolute majority of voters in support of the Government of the day. The difference is that majoritarian systems ensure that the largest minority forms a Government. What the Liberals want is a system in which the smallest minority determines the Government. We know that from other countries, not least Germany, where the third party simply changed the Government of the day without there being an election to secure that change.

David Howarth: The Secretary of State is wrong even about whether the party with the largest number of votes always gets the largest number of seats under the present system. It does not. To call the system majoritarian when the leading party does not have a majority of the votes is rather a strange description. Is not the truth that both in 1997 and again in different words in 2001, the Labour party was happy to give the impression of being a reforming party, but as soon as it won the election under the existing system it reneged on its promises?

Jack Straw: I remember exactly what we said in 1997, because the responsibility was mine. I never gave the impression of being someone who had suddenly had a Pauline conversion in favour of proportional representation, because I had not and have not. What we said was that we would establish a committee, quite properly, to examine new systems of voting. That committee duly reported under the chairmanship of the late Lord Jenkins, and the truth was that there was not a consensus for change, and had the matter gone to a referendum I think it would have been seen as a waste of public money. We now propose a choice for the British people that preserves the best of our system, and there is an opportunity for a great debate about whether we follow what the Australians have done, which in some respects has added to the robustness of their constituency-based system.

George Howarth: May I invoke the spirit of David Taylor and offer my right hon. Friend some robust advice? Does he accept that the alternative vote system does not necessarily produce any more proportional an outcome than the first-past-the-post system? The only way in which that can be remedied is through top-up seats, but does he accept that they would inevitably create two classes of Member in this House? Is it not too much of a risk to go ahead with such a system?

Jack Straw: I accept what my right hon. Friend says-

Edward Vaizey: Sit down then.

Jack Straw: I was going to add a gloss to it. On my right hon. Friend's first point, no one has ever suggested that the alternative vote produces a proportionate result. However, by definition, it requires each individual Member to be elected by at least 50 per cent. of those voting, and many see that as one of its merits. It avoids the problems of so-called AV plus, which would lead to two tiers of Members of Parliament. I think that that would be anathema, and would never gain the support of the British people.

Compulsory Transfer Agreements

Philip Hollobone: With how many countries the UK has compulsory transfer agreements for the return of foreign national prisoners.

Jack Straw: Changes made in the Police and Justice Act 2006 have enabled the United Kingdom to ratify the Council of Europe's additional protocol and to negotiate bilateral agreements to provide for compulsory transfer of prisoners. Arrangements are now in place with 35 countries for transfers without consent. Negotiations with other countries are continuing. Since the change in the law was brought into effect, the starting point for all negotiations of prisoner transfer agreements has been on that basis.

Philip Hollobone: May I suggest to the Secretary of State that progress has been pathetically slow, given that foreign national prisoners now make up some 13 per cent. of the prison population in England and Wales? Does it not give a hollow sound to the Prime Minister's pledge in July 2007, when he said:
	"If you commit a crime you will be deported from our country. You play by the rules or you face the consequences"?

Jack Straw: I do not accept either of the hon. Gentleman's points. First, the proportion of foreign national prisoners in United Kingdom jails-he cites 13 per cent.-is much lower than that in the vast majority of European countries. For example, in France the figure is 19 per cent., in Germany 26 per cent., and in Greece and Austria 43 per cent. We are far better than most European countries at managing our foreign national prisoner population.
	There are two aspects to the hon. Gentleman's question. One is about prisoners who are serving their sentences: we wish them to be compulsorily transferred out to serve their sentence abroad. The second is about deportations of so-called time-expired foreign national prisoners, whom the conventions do not affect. We have significantly increased the number of time-expired prisoners who are deported.

Alan Duncan: I thank the Secretary of State for his reply, but even though few bilateral transfer agreements have materialised so far, are they not, in many cases, an example of shutting the stable door after the horse has bolted? How many foreign national prisoners who could or should be deported should not have been in the UK in the first place, but were here illegally, as a result of the Government's dysfunctional border policy?

Jack Straw: I am happy to seek to provide the hon. Gentleman with an answer and lay it before the House. However, let me emphasise that we have greatly reduced the number of asylum seekers who come to this country-it is now around a third of the number with which I was faced when I became Home Secretary 12 and a half years ago. We have significantly tightened border controls-often with not much help from the Opposition on the practical policies that are required. We are also increasing year by year the numbers deported.

Voting Age

William Bain: What recent assessment he has made of the merits of lowering the voting age to 16 years.

Michael Wills: The Youth Citizenship Commission's report noted that opinions were divided on lowering the voting age to 16. The Government are now considering the report and how to make progress on it.

William Bain: I thank my right hon. Friend for that reply. Does he accept that, 41 years after the previous lowering of the voting age, there are powerful arguments for considering a further reduction to give the vote to 16 and 17-year-olds? Under the current system, some young people have to wait almost until their 23rd birthday to vote in a UK general election. Surely someone who is old enough to pay tax in this country, and old enough to join the armed forces, is old enough to exercise the democratic right to vote.

Michael Wills: I am grateful to my hon. Friend. Of course he is right to say that there are arguments in favour of lowering the voting age, which is precisely why we asked the Youth Citizenship Commission to look at the issue. However, it found that opinion is divided, even among 16 to 18-year-olds. We have to proceed carefully. The only way that we can make radical changes in the voting age, as with anything else to do with the electoral system, is-as far as we possibly can-on the basis of consensus.

Departmental Staff Internet Usage

Robert Goodwill: What his Department's policy is on the private use of e-mail and the internet by its staff during working hours.

Claire Ward: May I add to the comments made by my colleagues, and offer my condolences to the family of David Taylor?
	Private use of the Ministry's e-mail and internet systems during working hours happens only with the permission of line management. Such usage must be reasonable, and there is strict monitoring by Ministry of Justice IT services. Any use must not interfere with the performance of official duties. Staff are not permitted to access social networking sites for personal reasons; they may access such sites only for professional reasons, if they can provide a strong business case that shows they need to use those media to perform their roles-such as when somebody was impersonating my right hon. Friend the Justice Secretary on Facebook. It was important for MOJ staff to be able to monitor what he was allegedly saying.

Robert Goodwill: It has been estimated that surfing the web in work time costs private business in the region of £624 million per year, and I suspect that that problem permeates most Government Departments and their agencies, too. May I commend to the Minister one possible solution to the problem, which has been adopted by Pindar, in Scarborough? That firm provides a separate work station, away from the rest of the work stations in the open-plan office, for private use-and that is the only place where private use can be made of the internet in work time.

Claire Ward: The hon. Gentleman makes an interesting suggestion. Actually, the MOJ controls very strongly, and monitors, the access that staff have to browse or surf the web. Within the central area of the MOJ headquarters there are some computers that have much freer access, and those are available for staff to use in their private time, such as lunchtime and before or after work. However, I will certainly make sure that the MOJ IT services find out about the company to which he refers.

Prison Population

Madeleine Moon: What recent representations he has received on reducing the prison population.

Jack Straw: My Ministry regularly receives many representations on prison matters. The Government have undertaken the fastest ever prison building programme, increasing capacity by over 25,000 places since 1997-around 3,500 are planned for delivery this year-during a period in which crime has fallen by a third.
	Overwhelmingly, the increase in the prison population has been of adult male prisoners. Since the publication of the Corston review, the number of women in prison has decreased by more than 4 per cent. We are also endeavouring to increase the transfer of prisoners with serious mental health problems to the NHS secure estate.

Madeleine Moon: May I too add my comments on the very sad loss of David Taylor? I was a new member in 2005, and he was unstinting in his support, and in giving advice, support and a friendly smile as we moved around this place throughout the years.
	Ninety per cent. of our prison population have a mental health problem, 70 per cent. have two or more mental problems, and 16 per cent. have up to four or five different mental health problems. A young lady in my constituency has been in and out of prison following offences occasioned by her mental health problems. What steps can we take to work with those mental health charities that are urging us to look at how we improve services-

Mr. Speaker: Order. I am extremely grateful to the hon. Lady, but we must make some progress.

Jack Straw: About two years ago I established the Bradley review, which produced a series of important recommendations that we are now actively seeking to implement. My hon. Friend is right to say that a high proportion of offenders have mental health problems in one form or another. With the best will in the world, only those with the most serious mental health problems will be capable of transfer to the NHS secure estate, but we are now seeing, and have seen, much better collaboration between the prison medical services, which are now part of the NHS-that was a major reform that I introduced a dozen years ago-and the NHS outside, so that with luck, we can ensure that those with mental health problems do not fall into offending, and that if they do, they are better treated.

Dominic Grieve: On behalf of the Opposition Front Bench, may I join the Secretary of State in his expressions of condolence on the death of David Taylor?
	The Justice Secretary was asked about reducing the prison population, but is not the principal tool that he has used one that has seen 70,000 criminals released early from prison under his watch? In the last three years, 40 convicted criminals avoided jail each week despite being assessed as at a high risk of causing serious harm to others. Is it negligence, incompetence or a concerted Government policy that is putting the public at risk?

Jack Straw: None of those. I regret the fact that we had to introduce the early release scheme, but overall we have been far better at managing the prison estate and the prison population than ever happened in 18 years of Conservative Government: 3,500 prisoners were released in one go-I was in the House when it happened-in July 1997, conveniently just after a general election. There were also more escapes from close prisons per week in the early 1990s than there were last year in the whole 12-month period.
	I hope that the hon. and learned Gentleman will tell us more about his plan to halve the number of prison places-

Mr. Speaker: Order. May I say to the Secretary of State that the hon. and learned Gentleman is under no obligation to do that?

Dominic Grieve: The Secretary of State engages in classic displacement activity. The figures that I gave him are his figures, and they happened on his watch-6,000 offenders who were assessed as being at high or very high risk of causing serious harm avoided jail. He says that there is no deliberate policy, but it cannot be sheer incompetence. Some 10,000 prisoners have absconded from prison under this Government, he has pressured the judges not to give prison sentences because he failed to provide the capacity, and now he is offering foreign prisoners up to £5,000 to leave Britain. Will he confirm that that is his policy and his creation, and that his Department will not tell us the total cost of that because it has called in the auditors?

Jack Straw: I have never pressured the judges one way or the other on their sentencing. Indeed, we now have a transparent system of sentencing guidelines. The fact that the prison population has increased so much-by 40 per cent. since 1997-is a testament both to the fact that this House has toughened up prison sentences, at our instigation and with the Opposition voting against, and to the judiciary, magistrates and judges alike, speaking for the British public. That is a sensible policy, as opposed to a policy of seeking to halve the prison population, as the hon. and learned Gentleman has promised to do.

Topical Questions

Bob Spink: If he will make a statement on his departmental responsibilities.

Jack Straw: As the Under-Secretary of State for Justice, my hon. Friend the Member for Lewisham, East (Bridget Prentice) announced in a written ministerial statement today, we have just published a consultation paper to require mortgage lenders to obtain a court order or the consent of the borrower before repossessing and selling residential owner-occupied homes. That would remove the so-called Horsham loophole. The latest figures show that more than 30,000 people across England were helped between October 2008 and September 2009 under court duty schemes. On average last year, four out of five people had the immediate threat of repossession halted following help from Government-funded court desks.

Bob Spink: Mr. Speaker, David Taylor was a personal friend. His hard work, his independence and his respect for this Parliament will be greatly missed.
	Will the Secretary of State boost public confidence in the prison service by making prison regimes tougher, with more education and fewer drugs, and early release contingent on the prisoner's behaviour and the likelihood of reoffending? That would boost public confidence.

Jack Straw: What we want to see is prison made effective. It is tough, and those who recognise the reality of prison would not want to spend a day inside. We have dramatically increased the resources available for education and, as my hon. Friend the Minister of State, Ministry of Justice, the Member for Liverpool, Garston (Maria Eagle) has said, we have significantly increased the resources for drug treatment. Prisoners on longer-term sentences have to prove, by their good behaviour, that they are ready for parole. Those on indeterminate sentences cannot be-and are not-released unless the parole board judges that it is safe for that to happen.

Madeleine Moon: A Wales Audit Office report has concluded that specialist services such as in-patient and forensic mental health services have been poorly managed and controlled in Wales. What steps can we take to ensure that mental health services provided in Welsh prisons for young people and children are vastly improved?

Jack Straw: We can do a good deal. As I have mentioned already to my hon. Friend, we are implementing the Bradley report. Dealing with prisoners who have mental health problems is very challenging for all concerned, but we are in no doubt about the priority that we attach, and which has to be attached by all prison establishments, to doing it.

Mark Hunter: Wolstenholmes, a law firm first established in 1818 and based in my Cheadle constituency, was closed down last week by the Solicitors Regulation Authority. There is now an ongoing investigation into claims of dishonesty and account irregularities. Not surprisingly, many residents have contacted me, extremely concerned about documents and moneys held by the firm. Can the Secretary of State reassure my constituents that their documents and money will be safe, that they will be fully compensated as appropriate, and that there will be a full investigation into the circumstances?

Jack Straw: I am happy to arrange to meet the hon. Gentleman. I understand the anxiety that will obviously be caused to former clients of Wolstenholmes in that situation. I am also happy to go through with him what we, and the Solicitors Regulation Authority, can do.

Phyllis Starkey: May I refer the Minister of State back to his earlier reply about the reduction of the voting age to 16? I suggest that he look at earlier attempts to extend the franchise-for example, to non-property-owning men, and to women-and consider whether it might not be better to rely on democratic principles, rather than simply on a referendum among those who already have the vote.

Michael Wills: Of course I am happy to take the historical reference, but I think that my hon. Friend will be aware that all the data show that, even among 16 to 18-year-olds, there is a profound division of opinion about whether the voting age should be lowered.

Ben Wallace: With the ever-growing tempo of operations, more and more veterans might find themselves in custody. Her Majesty's Prison Lancaster Castle has, under its own steam, started an initiative for supporting veterans in custody, through which it tries, across the north-west, to link veterans with agencies. The Minister with responsibility for veterans, the Under-Secretary of State for Defence, the hon. Member for North Durham (Mr. Jones), has been very supportive, but at the end of the day the money required comes from the Ministry of Justice. Will the Secretary of State agree to consider its proposal and see whether the small amount of funding required for the pilot scheme could be within his gift?

Maria Eagle: I am very happy to look into what the hon. Gentleman says about Lancaster. Like many of us throughout the House, he is concerned about veterans of our armed forces ending up in custody. We have just completed a joint data-matching exercise with the MOD to identify the number of veterans in custody. The results show that 3 per cent. of the prison population have served in the armed forces. That will inform our policy development and enable us to provide greater support. We are providing new training for prison staff covering best practice, advice and support for veterans, and information on accessing specialist health treatments. However, I am more than happy to look into the particular instance that the hon. Gentleman has raised.

Tom Levitt: As the assistant to the Minister for the East Midlands, I add to those of others my condolences to the family of David Taylor.
	The Secretary of State will recall visiting Buxton magistrates court in September 2008, when he saw the terrible conditions under which magistrates, staff and others had to work. He will be pleased to know that the refurbished court reopened last week and that magistrates have expressed their satisfaction with it. However, we still need, at some point, a purpose-built court to serve the whole of High Peak. I would be grateful if he could tell me that this aspiration is still at least on the table.

Jack Straw: I do indeed remember visiting my hon. Friend's constituency, not least the magistrates court, which was in a poor condition. I am glad that, as a result of the representations I received then from him and those in the Court Service, we were able to do something about it. The proposals for new court buildings, which include some in my own constituency, are on the table, but some have had to be deferred because of the tight financial situation, which affects my Department.

Desmond Swayne: There is a widespread and growing perception that community punishments are a soft touch, which is reinforced by the number of miscreants who simply absent themselves, apparently with impunity. What are Ministers going to do to ensure that community "punishments" are exactly that?

Jack Straw: Community punishments used to be a soft touch. When I became Home Secretary some years ago, it was almost voluntary as to whether offenders-or perhaps I should say miscreants-turned up for their punishment. One of the other reasons why there has been such a large increase in the prison population is that we have toughened up the breach arrangements, so that if offenders fail to turn up for their appointments with the probation service, or for unpaid work, they can be, and are, sent to jail. I am glad that that is happening. We have also toughened up the perception of community punishments, not least by requiring that offenders on unpaid work wear high-visibility jackets, and by asking the public what kind of work they wish those offenders to undertake.

Mr. Speaker: Order. May I gently say to the House that what should not be voluntary is the requirement for short questions and short answers, if we are to maximise the progress down the Order Paper?

Stephen Hepburn: May I ask the Justice Secretary what advice he has offered the Prime Minister on the issue of pleural plaques?

Jack Straw: A good deal. This is a difficult issue and involves potential expenditure by a number of Departments, but consideration by Ministers continues.

Edward Vaizey: Does the Secretary of State agree with Sir Hugh Orde that his recent remarks about lazy police officers were not constructive and do not reflect the hard work and dangers that many police officers face? Has he not added insult to injury, having already cut police pay?

Jack Straw: What I was seeking to do-I will send the hon. Gentleman a signed copy of the transcript of my interview-was to say what I hope every Member of the House understands, which is that for a given level of resources, some parts of the same public service do very much better than others. That is true for the health service, the courts and the prisons, and it is also true for the police service. I know that from my long experience-and interestingly, much of what I said was endorsed by a number of police officers, who understood what I was saying. I am a 100 per cent. supporter of the police and what they have done to reduce crime. That cannot, however, prevent us from saying, "This service is doing well; that one's doing less well. Why is there a difference?"

Ann Cryer: May I just say how very much I appreciated David Taylor's presence in this House, including in the Dining Room? We will all miss him a great deal.
	Has the Justice Department examined the comparative costs and reoffending rates between keeping drug addicts in prison and providing residential accommodation with detoxification and rehabilitation facilities?

Maria Eagle: Over the past few years we have tried to ensure that drug treatment is available at the same level inside and outside prison, so that individuals can get the treatment suitable for their particular addiction problem, whether they are inside prison or out in the community. We have made great strides in ensuring that that is now possible.

Simon Hughes: In the light of the protests and the revelations by the National Association of Probation Officers, will Ministers now instruct their civil servants not to interfere in the drawing up of reports before sentence by probation officers-and in particular, not to ask people to exclude perfectly proper mitigating factors, such as the reason for the protest or the activity?

Maria Eagle: There have always been guidelines about how best to produce reports for the courts to ensure that the correct information is there. I am willing to consider any instance that the hon. Gentleman wants to draw to my attention, but it is certainly not the practice of the National Offender Management Service or of Ministers to interfere with precisely what should go into a particular report for the courts.

Chris Ruane: The Minister will be aware that under the Electoral Administration Act 2006, £17 million was allocated by his Department to the Department for Communities and Local Government to improve registration. That money was unhypothecated. Can he guarantee that the money that was sent for registration was spent on registration?

Michael Wills: My hon. Friend will be aware that there are considerable variations in practice between electoral registration officers. Sadly, it appears that not all the money that should be spent on electoral registration is being spent on it. We have put measures in place to deal with that. My hon. Friend will be aware that we are determined to end the scandal of the 3.5 million people in this country who are eligible to vote but cannot do so because they are not registered-and we will.

Norman Baker: In the past few days there has been yet another suicide at Lewes prison. There have been far too many such cases in the past 10 years, and this seems to suggest a failure of duty of care at the prison, and a failure to deliver justice for the inmates through the courts. Will the Justice Secretary examine the circumstances of this particular suicide, and try to find out whether there are sufficient prison officers to handle the size of the population at that prison-and will he let me know the outcome of the investigation?

Maria Eagle: Each death in custody is examined carefully and closely by the prisons and probation ombudsman, and there will be the usual investigation in respect of this case. If the hon. Gentleman has particular points to make that he believes are of concern regarding the prison in his constituency, I would be more than happy to hear the details from him, and to take a close look myself.

Fiona Mactaggart: I represent a constituency in which, two years ago, there was ballot stuffing-roll stuffing-by a Conservative local government candidate. Will the Ministry consider making resources available, on the basis of risk, to local authorities in which there might be a risk of ballot stuffing, in order to ensure that that does not occur in the forthcoming general election?

Michael Wills: Of course we are always happy to look at any measures to deal with fraud. It is absolutely disgraceful when events such as those in my hon. Friend's constituency happen. Of course we will look at any concrete proposals. I want to reassure her that we are doing everything we can to combat fraud in our elections.

Alan Beith: Given that the Information Commissioner has today laid before Parliament a report criticising the Secretary of State's blanket veto on the release of Cabinet Committee minutes from 1997 relating to devolution, will the Secretary of State explain why those particular minutes were, in his opinion, an exceptional case, and why there were particularly pressing reasons to block their disclosure?

Jack Straw: I set out the detailed reasons in a written ministerial statement, with appendices, which I laid before the House as I undertook to do. I am happy to provide the right hon. Gentleman with a copy. The fact is that section 53 of the Freedom of Information Act 2000 is a fundamental part of the scheme of the Act; it was on that basis that the Bill was agreed. The legislation provides for an appointed person to exercise a veto either after a commissioner's decision or after a tribunal. There is, however, no requirement in the law to wait for a tribunal decision.

Anne McIntosh: The Justice Secretary is aware of my concern about the growing incidence of shop theft. Will he therefore deplore the remarks made by the vicar in York in the build-up to Christmas condoning shop theft, as such remarks are contrary not only to Government policy but to the Bible?

Jack Straw: They are also contrary to the ten commandments, as I recall-[Hon. Members: "Those are in the Bible, too."] Indeed. I missed the hon. Lady's last point, because one of my hon. Friends was trying to offer me some gratuitous advice. Anyway, I agree with her in every particular.

Yemen

Keith Vaz: (Urgent Question): To ask the Foreign Secretary if he will make a statement on the situation in Yemen, including the closure of the British embassy and the position of British citizens in Yemen.

David Miliband: My right hon. Friend the Home Secretary will address all the security issues arising from the Christmas incident immediately after this. I will now address the broader picture. As my right hon. Friend the Member for Leicester, East (Keith Vaz) knows, the Government have been increasingly concerned about the situation in Yemen and about the number and scale of the challenges faced by the Yemeni Government and people. We believe that the increasing insecurity and instability in Yemen pose a threat to the Gulf region, to the wider middle east and to the UK.
	Over the past 18 months, the situation has been a growing concern in the region and to Her Majesty's Government. Our cross-Whitehall discussions and close working with international partners led, in September 2009, to the development of a renewed UK country strategy for Yemen. This strategy is currently being implemented by Government Departments across Whitehall, including the Foreign Office, the Department for International Development and the Ministry of Defence. It covers four areas. The first is support for democratic political structures; the second addresses the causes of the conflict-so-called counter-radicalisation; the third relates to building the Yemeni capacity to tackle security and terrorism issues; and the fourth is directed at helping the Yemeni Government to deliver the functions of the state, onshore and offshore.
	To strengthen further the international community's support for the Government of Yemen in meeting those challenges, the Prime Minister announced on 1 January that the UK would host a high-level meeting on Yemen later this month, and that will indeed take place. The meeting will focus on galvanising international support for Yemen's fight against terrorism and co-ordinating assistance to address the longer-term economic and social factors underlying radicalisation and extremism.
	As a symbol of the Government's long-term commitment to Yemen, DFID signed a 10-year development partnership arrangement with the Government of Yemen in August 2007. The UK development spend is fully aligned to our Yemen strategy and to the priorities of the Yemeni Government's national reform agenda. We will spend about £25 million in fiscal year 2009-10; £35 million to £40 million in fiscal year 2010-11; and, dependent on progress on reform of state structures in Yemen, up to £50 million in 2011-12.
	The Government of Yemen are embattled on four different but related fronts: first, the tribal rebellion in the north; secondly, separatism and separatist movements in the south; economic decline across the country, which is particularly important in the context of a near doubling of the population of Yemen that is foreseen in the relatively near future; and also the growing threat from Islamist terrorism in the form of Al-Qaeda in the Arabian Peninsula, which finds safe haven in Yemen. Urgent economic and political reforms are the only long-term solution to Yemen's problems, but continued instability distracts from the Government's short-term efforts to address these priorities.
	As a result of ongoing security concerns, the British embassy closed earlier this week on a precautionary basis for two days. The embassy is now open and staff are back at work. Currently, however, the public services sections of the embassy-the visa and consular sections-are closed. This is under regular review and I discussed the issue with our ambassador in a video conference yesterday morning.
	I should point out that it is not unusual for embassies to close during times of heightened tension. During 2009, the British embassy in Sana'a closed on more than a dozen occasions. We have different procedures from other nations for assessing the safety and security of our staff. It would not be right to comment on the specifics of this closure, but I assure the House that it is kept under regular review to ensure that services are maintained. The embassy in Sana'a maintains regular contact with the British community through our wardens network and by regular factual messages to the British nationals who have registered with the embassy.
	Finally, the overall threat level in Yemen has not changed. As we make clear in the Foreign and Commonwealth Office travel advice, the threat from terrorism in Yemen is high and remains of concern. We continue to recommend against all non-essential travel to the country.

Keith Vaz: Thank you, Mr. Speaker, for allowing the question. I refer the House to the Register of Members' Financial Interests and to my personal interest, as I was born in Yemen and lived there for nine years of my life.
	In welcoming the London conference, will the Foreign Secretary state precisely what additional support has been given to Yemen as a result of this recent initiative? Will he also confirm that all the money pledged to Yemen in London in November 2006 has been paid over? Can we stop referring to Yemen as a failed state? It has the capacity to fail if Britain, America and the nearby Arab states do not support it. Can we also make sure that the Foreign Secretary visits the country as soon as possible?

David Miliband: There are three parts to my right hon. Friend's question. First, the London meeting will not be a pledging conference, and I do not think that that is what is needed. However, as my right hon. Friend intimated in the second part of his question, some £5 billion was pledged at the London conference in 2006. A small proportion of it has been disbursed, in part because of concerns about how the money would be spent, but there are other issues. I understand that about 40 per cent. of it has been signed and 81 per cent. allocated to different programmes, although only a very small percentage has actually been spent.
	In terms of my right hon. Friend's attempt to send me to Yemen, I cannot quite promise him that just at the moment, but the Minister of State, my hon. Friend the Member for Bury, South (Mr. Lewis), will be on a recce to Yemen next month. That will allow us to take forward the conclusions of the London meeting in an appropriate way.

William Hague: On behalf of the Opposition, I welcome the calling of a conference on Yemen in London on 28 January. I agree that Yemen is a fragile state-I think we should call it that, rather than a failed state-and that that matters to British security.
	I want to ask three brief sets of questions. First, in view of the closure of our embassy, is the Foreign Secretary confident that the right level of consular support can be given to British citizens and officials in Yemen in the event of further closures of the embassy, and that plans are in place to offer them protection?
	Secondly, following the announcement of additional US-UK support for a special counter-terrorist police unit and for the Yemeni coastguard operation, may we express the hope that those arrangements will be conducted better than Downing street has conducted US-UK co-operation on related matters in the last 24 hours? Specifically, will the support be purely financial, or will it involve actual assistance on the ground in the form of training? What is the time scale for its delivery, and when is the new unit expected to be up and running? Is this an exclusively US-UK initiative, or does it involve other countries and partners, such as Gulf nations, that may be prepared to work with us?
	Thirdly, it should be recognised that Yemen cannot be viewed solely through the prism of an al-Qaeda problem. The Foreign Secretary rightly referred to a mixture of issues. Yemen's internal conflicts are fuelled by political grievances, poverty, corruption and competition over depleted natural resources, issues that require political leadership from the Yemeni Government as well as assistance from the international community. Can the Foreign Secretary assure us that all those issues will be addressed at the conference in January, and will continue to be treated as a priority by his colleagues in DFID? Will he do his utmost to ensure that there is a focus on the Yemeni Government's responsibility to work towards a political settlement in the country, and that we look to the longer term as well as to the immediate problems?

David Miliband: I am confident that the right procedures are being followed in terms of consular support for British nationals. As the right hon. Gentleman will know, there is a relatively small number of them, although the Yemeni diaspora in Britain is of long standing. There is a proud set of Yemeni communities, including, in South Shields, the oldest in Britain. There is obviously some need for consular support, but the ambassador has assured me that that is being dealt with in an appropriate way. The network of wardens that operates in many countries is there to alert us to any problems, but has not yet been notified of any.
	The work that is taking place with the Yemeni authorities is more than paying out. The money includes finance for training, which has been an important part of the co-operation that is taking place. We will be discussing with a range of those attending the London meeting whether there is a way in which they could support the UK-US effort, and we will seek appropriate ways in which to use the skills and expertise that other countries can provide.
	I was glad to hear what the right hon. Gentleman said about the breadth of the British programme in Yemen and the need to maintain it. The short term, the medium term and the long term are related. Most of the grievances that exist in Yemen are local rather than being related to the global jihad, and although al-Qaeda can try to find roots there, the vast bulk of the issues motivating Yemenis are what we would call bread-and-butter issues that a Government should be seeking to address. Certainly it is the prime responsibility of the Government of Yemen to do so.

Edward Davey: Of course the actions of the Foreign Office in Yemen in closing the embassy and working with our allies in Yemen and the United States enjoy support across the House, but will the Foreign Secretary reassure us that, in supporting action against al-Qaeda in Yemen and elsewhere in the region, we are ensuring that local people are not inadvertently alienated by our actions and those of our allies? In giving military support and aid to the Yemenis, and in developing the cross-departmental strategy to which the Foreign Secretary referred, are we impressing on the Yemeni Government the importance of avoiding civilian deaths and of building a sustainable coalition against al-Qaeda across the whole country?

David Miliband: The hon. Gentleman makes an extremely good and important point, which is highly relevant, and let me say two things on that. First, there has been a very wide welcome across the Gulf, as well as within Yemen, for the fact that the London meeting will not be focused simply on counter-terrorism, because that might play into the sort of dangers to which he rightly refers. The incubus that is Al-Qaeda in the Arabian Peninsula must not become a rallying point for the people of Yemen, because they become the unwitting or unwilling victims of attempts to tackle the AQAP presence there.
	Secondly, the hon. Gentleman is also absolutely right to insist that the economic, social and political issues at the heart of Yemen's development need to be addressed. I think that I am right to say that Yemen's oil wealth is likely to run out in 2015, and the dangers of water scarcity are very real. Those issues evidently are not amenable to a counter-terrorist solution, and require a much more deep-seated and effective role for government, supported by the international community. That is why the fourth priority that we mentioned-the functioning of the state-is so important to addressing those issues.

Gisela Stuart: The Foreign Secretary mentioned radicalisation; will he undertake also to have close talks with the Saudi Government? They have some programmes that may seem unorthodox to some western eyes, but that nevertheless seem to be working in the Saudi and Arab context. I think that we should learn from that.

David Miliband: My hon. Friend makes an important point. As it happens, the Saudi programme that was featured on this morning's edition of the "Today" programme is one that I visited last year in Saudi Arabia. It is a counter-radicalisation programme, rather than a radicalisation programme-that is an important point to make-and is extremely innovative. I met a failed suicide bomber-

Alan Duncan: By definition-

David Miliband: Hence failed, but it is not a laughing matter, as he killed a lot of people in a market by blowing up a bomb in a truck that he was driving. He said that he did not know what its contents were and that he had been inveigled into driving the truck. He and a number of other people were going through that programme, which involved taking a comprehensive look at their lives, including in relation to religious instruction. A large number of innovative products are also available in terms of people's return to normal life after the programme. My hon. Friend is absolutely right to draw attention to this matter, and I congratulate the Saudi Government on how they are going about dealing with it. It is certainly something that we work closely with them on.

Tim Loughton: May I also declare an interest as an officer of the all-party group that visited Yemen a couple of years ago? I found some very impressive Anglophile Ministers there, who think that Britain has a key role to play in that country and who want us to play a key role. I also found that the electoral gains made there by radical Islamists were in the areas of greatest poverty. We clearly need to do more to eradicate the terrorists, but can we also do much more to eradicate and rehabilitate their breeding grounds?

David Miliband: I am sorry to sound like a stuck record, but the hon. Gentleman also makes an important point. I hope that the House can be united in making the point that those who allege in today's newspapers that we are wasting our money by spending development funding on anti-poverty measures in Yemen are wrong. The figures that I have read out are substantial by any stretch of the imagination, but the fact that they enjoy cross-party support is positive. He is right that if Yemen is to be prevented from becoming a more dangerous breeding ground for terrorism, it needs to develop the sort of life chances for people that he and I may take for granted.

Paul Flynn: At an enormous cost in loss of British human lives, we joined America in its invasions of Iraq and Afghanistan. Before we commit even more human lives to another nightmare, should not we consider the possibility of having an independent British foreign policy?

David Miliband: We should certainly have a foreign policy that is decided independently by the Government and people of this country, but we should not have an isolated foreign policy that attempts to work on its own. I am proud that we are very close partners of the United States, European Union countries and a large number of countries in the Gulf, which are very concerned about the situation. The attention that we have been paying to Yemen in the past 18 months is in significant part a product of the growing concern, from 2008, of countries in the Gulf that wanted British help regarding their concerns about the situation in Yemen. We are not unwelcome helpers in Yemen, and we certainly are not trying to recolonise it. That is an important point to emphasise.

Bernard Jenkin: Although I welcome this short discussion about Yemen, we are only having it because of al-Qaeda. Would it not be instructive if the Government were to produce a document about the international strategy against al-Qaeda, or hold a conference in London at which international partners could be invited to talk about that? That would be better than waiting for statements about other countries in which al-Qaeda is operating that may not be in the news at the moment.

David Miliband: The hon. Gentleman makes an important point, although I think that he would be one of the first to recognise that it is wrong to talk simply about al-Qaeda and not to distinguish between its senior leadership based in Afghanistan and Pakistan and Al-Qaeda in the Arabian Peninsula or in the Maghreb. There are distinctive issues related to al-Qaeda's senior leadership on the one hand and its so-called franchises on the other. They are certainly worthy of study and debate, and the more the better, as far as I am concerned. However, the hon. Member for East Worthing and Shoreham (Tim Loughton) made the good point that there was a meeting with parliamentarians on the situation in Yemen before the Christmas incident. The fact that there is a thriving all-party parliamentary group, chaired by my right hon. Friend the Member for Leicester, East, speaks for the close links that exist between Britain and Yemen, and long may they continue.

Paul Goodman: Given that a significant proportion of terror offenders turn out to have been radicalised towards extremism here in Britain rather than in Yemen or elsewhere, should not the Prime Minister also consider calling a summit on the radicalisation towards extremism and terror that takes place here?

David Miliband: That is exactly what the Prevent strategy has been founded on over a number of years. A large number of meetings-I do not know whether they qualify as "summits"-have been held within Government and around the country to address precisely this issue.

Nicholas Winterton: I agree with the Foreign Secretary about the importance of aid in removing what I call the "scourge" of the spots where terrorism can spring up, but my right hon. Friend the shadow Foreign Secretary described the Government of Yemen as fragile. Will the Foreign Secretary tell the House just how widely supported the Government of Yemen are among all the people, bearing in mind the tribal conflicts in the north and the separatist movement in the south?

David Miliband: Far be it from me to be a lawyer for the right hon. Member for Richmond, Yorks (Mr. Hague), but in his defence-or at least in explanation of his position-I think that he said that Yemen was fragile, and not its Government. The hon. Member for Macclesfield (Sir Nicholas Winterton) will know that President Saleh is in his second term of office, and that the constitution prohibits him from running for a third term. Parliamentary elections in Yemen are due in 2011, and they will clearly be a massive challenge. One issue that will need to be addressed is precisely those democratic elections and people's ability to express their opinions in them. However, the number of Yemenis who are committed to violence-whether through the Houthi movement in the north or the secessionist movement in the south, and still less through links to al-Qaeda-are a very small minority.

Ben Wallace: All over the world-in Afghanistan and Pakistan and next door in Somalia, for example-our armed forces and aid budgets are stretched. Why has Britain, or perhaps the Prime Minister, chosen to take a lead in Yemen, when our resources are so stretched? Might it not be time to let the US or our other allies take a lead with regard to Yemen? Is it perhaps not a country too far?

David Miliband: So much for an independent foreign policy. First of all, this country has a long-standing history with Yemen, and I think that that gives us an important role there. Secondly, we are in a group of pre-eminent donors that includes the United States, the Germans, the Dutch and the Saudis, and indeed I spoke to the German Foreign Minister today. In terms of the stretch, we have been careful to make sure that, in our funding in Yemen, we spend only what we know that we are able to spend properly there. The hon. Gentleman is right that there is a range of other problems. In my view, the situation in Somalia is best addressed through the security work of AMISOM-the African Union mission in Somalia-but, on a political level, through the UN Security Council. The meeting that has been called and the other forms of co-ordination that are being established befit the situation in the Yemen rather better. History in Somalia is rather different.

Philip Hollobone: The increase in international aid funding that Her Majesty's Government have promised pales into insignificance against what the oil-rich Arab countries on the peninsula could and should provide. Should not Her Majesty's Government make it clear to the countries on the Arabian peninsula that their priority should be dealing with potential problems from the Yemen, rather than spending millions of pounds on half-mile-high skyscrapers?

David Miliband: I am not sure whether it is the Government who are spending the money on the skyscrapers to which the hon. Gentleman refers, but he makes an important point. Some of the largest pledges at the 2006 conference were from Gulf countries, not western countries. It is important that those pledges are fulfilled. My right hon. Friend the Member for Leicester, East raised the question of which of those pledges had been paid, and that is a pertinent point.
	The point of mentioning our aid programmes is not some vainglorious attempt to say that we have the biggest programme but to explain that there is a British commitment and it is proportionate to the sort of responsibility that we should bear. The hon. Gentleman is right to say that this is an issue that needs to be raised by countries of the region. I am pleased to say that in the past 18 months they have been doing so, and they have put us on alert about their needs.

Aviation and Border Security

Alan Johnson: With permission, Mr Speaker, I would like to make a statement on the failed attempt to destroy a passenger plane at Detroit airport on Christmas day and its implications for national security. My right hon. and noble Friend the Secretary of State for Transport will make this statement in the other place.
	On 24 December, Umah Farouk Abdulmutallab, a Nigerian citizen, travelled from Lagos to Amsterdam, where he boarded Northwestern Airlines flight 253 to Detroit. As the flight was approaching Detroit on Christmas day, he detonated a device that was strapped to his upper thigh and groin area which resulted in a fire and a small explosion. He was restrained and subdued by passengers and flight crew and he remains in custody in the US.
	Authorities in the US, the UK, the Netherlands, Nigeria and Yemen are now doing everything they can to piece together Abdulmutallab's movements shortly before this attack, and are considering what urgent steps need to be taken to prevent further attacks of this nature.
	It is an issue of grave concern that the explosive device was not detected by airport security in either Lagos or Amsterdam. As has been widely reported, Abdulmutallab attended University college London between 2005 and 2008, where he completed a degree in engineering. During this time he was known to the Security Service but not as somebody engaged in violent extremism. His family and friends have stated their belief that he turned to this during his time in Yemen.
	From the information we have currently, it is not possible to chart with absolute certainty Abdulmutallab's exact movements after he left the UK in 2008. He is known to have spent several months studying international business at a university in Dubai and in August 2009 he travelled to Yemen, where he is thought to have stayed until December before returning to west Africa. He came to the attention of UK authorities again on 28 April 2009 when he applied for a multi-entry student visitor visa to attend an eight-day course provided by Discovery Life Coaching based in east London. The UK Border Agency refused his visa application because Discovery did not hold a valid accreditation with a UKBA-approved body and was not eligible to sponsor international students.
	Since March 2009, only institutions which are either tier 4 sponsors or hold valid accreditation are permitted to bring in short-term foreign students from outside the European economic area. Universities and colleges must be able to demonstrate that they are offering genuine courses that will benefit students seeking to study in the UK. This new regime has reduced the number of institutions able to bring students to the UK from over 4,000 to approximately 2,000. Following the refusal of his application, Abdulmutallab's name was added to the UKBA watch list.
	In the light of the serious questions that this incident has raised, I want to set out today, first, the immediate steps that we are taking to tighten aviation security, secondly, what measures we are taking to prevent radicalisation in our universities, and thirdly the actions we are taking to disrupt al-Qaeda in countries where it is known to be active, in order to prevent future terrorist attacks, and to improve co-operation with our international partners.
	It is of great concern that Abdulmutallab was able to penetrate airport security at Amsterdam. The device he used had clearly been constructed with the precise aim of making detection by existing screening methods extremely difficult.
	Abdulmutallab underwent a security check at Schipol airport in Amsterdam, as do all passengers transferring from Nigeria to another flight. Although Schipol airport is trialling body scanners, they were not in use for that flight. He passed through a metal detection gate, which would have detected objects such as explosive devices with metallic components, and knives and firearms. However, certain types of explosive, without metallic parts and which can also concealed next to the body, cannot be detected by that technology, which is the reason why airports also search passengers at random.
	To defeat the terrorist threat requires constant vigilance and adaptability. A great deal of progress has been made in enhancing aviation and border security since 9/11; but terrorists are inventive, the scale and nature of the threat changes, and new technology needs to be harnessed to meet new threats, while minimising inconvenience to passengers.
	Last year, we issued new public guidance to the industry on our technical requirements for screening and the detection of improvised explosive devices. The Prime Minister instigated an urgent review of airport security following the incident in Detroit. My noble friend the Secretary of State for Transport and I have been intensively engaged in the review, and we are today setting out our initial steps.
	It is clear that no one measure will be enough to defeat inventive and determined terrorists, and there is no single technology that we can guarantee will be 100 per cent. effective against such attacks. Airport security is multifaceted and needs to adapt constantly to evolving threats. We therefore intend to make changes to our aviation security regime.
	Air passengers are already used to being searched by hand, and having their baggage tested for traces of explosives. The Government will direct airports to increase the proportion of passengers searched in that way. There may be some additional delays as airports adapt, but I am sure the travelling public will appreciate the reasons behind this.
	The Transport Secretary has brought into force new restrictions that tighten up security screening for transit passengers, and is reviewing the support we provide for security standards in airports operating direct flights to the UK. Passengers will see an increased presence of detection or sniffer dogs at airports to add to our explosives detection capability.
	We also intend to introduce more body scanners. The first scanners will be deployed in around three weeks at Heathrow. Over time, they will be introduced more widely, and we will be requiring all UK airports to introduce explosive trace detection equipment by the end of the year. We are discussing urgently with the airport industry the best way of doing all this, which will include a code of practice dealing with the operational and privacy issues involved.
	BAA has started training airport security staff in behavioural analysis techniques, which will help them to spot passengers acting unusually and target them for additional search. Beyond that, we are examining carefully whether additional targeted passenger profiling might help to enhance airport security. We will be considering all the issues involved, mindful of civil liberties concerns, aware that identity-based profiling has its limitations, but conscious of our overriding obligations to protect people's life and liberty.
	These measures build on the substantial progress we have made in recent years to strengthen our borders. The roll-out of e-Borders, which will check passengers, including those in transit, against the watch list, will be 95 per cent. complete by the end of this year, and makes us one of only a handful of countries to have the technology that can carry out advanced passenger data checks against our watch list before people travel to the UK. Those who apply for a visa-whether they do so from Bangkok, Lahore or Pretoria-have to provide fingerprints and their records are checked against our watch list, which holds over a million records of known criminals, terrorists, people who have tried to enter the country illegally or been deported, and those who agencies consider a threat to our security.
	Through the e-Borders programme and through screening passengers against the watch list, we have since 2005 made 4,900 arrests for crimes including murder, rape and assault. In addition, UK Border Agency staff based overseas, working with airlines, prevented more than 65,000 inadequately documented passengers from travelling to the UK during 2009.
	Abdulmutallab's failed attack highlights the importance of information sharing between the various agencies about people who pose a threat to our security. The UK watch list is managed by the UK Border Agency and incorporates intelligence from the law enforcement and the security and intelligence agencies into a single index. Nevertheless, although the integrated approach works very well, we want to see if we can further strengthen it. The Home Office will therefore be conducting an urgent review of the robustness of our watch list. The review will report to me in two weeks and, subject to security restrictions, I will report the findings to Parliament.
	The House will no doubt be concerned about the possibility that Abdulmutallab's radicalisation may have begun or been fuelled during his time studying at University college London. It is important to remember that the values of openness, intellectual scrutiny and the freedom of debate and tolerance promoted in higher education are one of the most effective ways of challenging views which we may find abhorrent but that remain within the law.
	However, we know that a small minority of people supporting violent extremism have actively sought to influence and recruit people through targeting learners in colleges and universities, and we must offer universities the best advice and guidance to help prevent extremism. As part of a measured and effective response to the threat, the Department for Business, Innovation and Skills has published guidance on managing the risk of violent extremism in universities, and is working closely with universities in priority areas to provide targeted support.
	Alongside this, each university has a designated police security contact with which university management can discuss concerns. The Prevent strand of Contest, our counter-terrorism strategy, works closely with the higher and further education sectors and funds a full-time Prevent officer at the National Union of Students. As I have said, Abdulmutallab's family believe he turned to violent extremism after leaving the UK, but we need to ensure that this close co-operation continues in our efforts to stop radicalisation of young people in our colleges and universities.
	Finally, I want to say something about our work internationally and the steps that the Government are taking abroad to disrupt al-Qaeda wherever they are active. Our success in tackling the international terror threat depends on strong relationships with our international partnerships. In our efforts to thwart al-Qaeda, we have a long-standing, productive partnership with the US.
	I am not prepared to go into detail on this particular case about what was shared with the US and when. It is an established and accepted principle that we do not routinely comment on intelligence matters. Moreover, some of these issues are still current and are highly sensitive. However, I would like to clarify that although we did, in line with standard working procedures, provide information to the US linked to the wider aspects of this case, none of the information that we held or shared indicated that Abdulmutallab was about to attempt a terrorist attack against the US.
	This morning, I met Jane Lute, the US Deputy Secretary for Homeland Security. We discussed how over the coming months, in the light of this failed attack, we will work together with other international partners to maintain public confidence in aviation security and deepen our partnership to disrupt al-Qaeda's activities overseas. Pushed out of Afghanistan and under increasing pressure in the border areas of Pakistan, affiliates and allies of al-Qaeda-such as Al-Qaeda in the Arabian Peninsula, the group claiming responsibility for the Detroit bombing-have raised their profile. With the failed Detroit attack they have again demonstrated their intent to attack innocent people across the world.
	The aim of our counter-terrorism strategy is not just to reduce our own vulnerability, but to dismantle those terrorist organisations which pose a threat to the UK, whether at home or abroad.
	Al-Qaeda will take any opportunity to exploit ungoverned space and instability. Whether the threat is in the Sahel, Somalia, Yemen, Pakistan, Iraq or Afghanistan, we must support Governments and work with partners to address both the threat of attack and the underlying causes of extremism and instability. We have been working with the Yemeni Government, as my right hon. Friend the Foreign Secretary just said, for a number of years, helping to improve their law-enforcement, intelligence and security apparatus, and to disrupt al-Qaeda and deny them a safe haven in Yemen for the future. We are also one of the leading donors on development in the country-our current commitment standing at £100 million by 2011.
	We recognise the need to strengthen further our partnership with countries in the region and beyond so that we can co-ordinate our efforts against al-Qaeda more effectively and provide greater support for the Yemeni people to reject violent extremism. International co-operation is critical to meeting what is a global threat, and the coming together of the international community in London later this month to discuss Yemen will be an important step towards security in Yemen and across the globe.
	It is important to reiterate that the incident was a failed attack on the US by a Nigerian national-someone who was refused entry to the UK and who, it seems, was radicalised after he left this country. However, there are lessons to be learned by the international community, and the measures that I have outlined will provide the UK with greater protection from terrorist attack. Along with our work overseas and with our international partners, enhanced airport security and more thorough collation of intelligence, we will be able to strengthen our efforts to tackle the root cause of violent extremism and reduce the threat of future attack.

Chris Grayling: I am grateful to the Home Secretary for providing me with an advance copy of his statement. I shall start with airport security.
	We all accept that as we learn the lessons from the recent plot, happily an unsuccessful one, additional security measures will have to be taken. The use of more sophisticated scanning technologies is inevitable, although we will have to make sure that sensible measures are taken to protect privacy. However, the Home Secretary's statement is ambiguous about scanners, so will he clarify whether he plans to make full-body scanners compulsory at all UK airports? He talked about e-Borders, so will he also clarify the situation with the European Union over the use of the e-Borders project? Will there be European legal restrictions on the use of the e-Borders database?
	We believe that it is necessary to take a more intelligence-led approach to airport security, as well as to watch carefully for suspicious behaviour by passengers, so the Government will have our support in taking prudent measures to protect passengers. Those matters of judgment must be kept under constant review, even if there is public attention only when the security measures are challenged.
	However, the person who should be before the House explaining himself this afternoon is not the Home Secretary but the Prime Minister. Twice in three days the Prime Minister has been caught out making false claims about the contacts that have taken place between Britain and the United States over the airline bomb plot and the security threat to our airports. On Sunday he admitted to the BBC that supposed discussions between himself and President Obama about the bomb plot and the situation in Yemen had not actually taken place. Then, yesterday, he claimed that Britain had supplied to the United States in 2008 intelligence about the bomb suspect and his links to extremists-a claim that Downing Street now admits was untrue. This Government, the House will remember, have systematically misused intelligence data over the years, most notably in relation to the so-called dodgy dossier. Does the Home Secretary agree that it is absolutely unacceptable for the Prime Minister-the man who leads our Government-to exaggerate, mislead on or spin intelligence information, particularly when it relates to a terrorist threat?
	The Home Secretary told the House this afternoon: "It is an established and accepted principle that we do not routinely comment on intelligence matters." Why did the Prime Minister and Downing street break that principle this week? Does the Home Secretary agree also that it is damaging to our most important intelligence relationship, with the United States, for Downing street to disseminate information in such an inaccurate and cavalier way?
	The entire House will be relieved that on this occasion the bomb plot was unsuccessful. It will serve as a strong reminder to Governments across the world of the ever-present terrorist threat and the fact that we all need to remain vigilant about that threat as well as united in a determination to defeat it.
	It is also worth saying that the threat from a small group of Islamic extremists in no way represents the views and beliefs of the vast majority of decent, law-abiding Muslim people in this country and around the world. People of all faiths have been victims of terrorists over the past decade, and we must all stand together against that threat. However, that task has not been helped by the actions of Downing street in recent days.

Alan Johnson: I regret the fact that the hon. Gentleman uses this very tense time to score cheap party political points. I saw lots of faces among those on the Conservative Benches looking appalled that this situation should be used to make a personal attack on the Prime Minister.
	The hon. Gentleman made only three points that I believe are relevant to this issue. First, on the number of full-body scanners, we now need to work with the airline industry to decide how many of these scanners we can have and where we can locate them. As I said, we will have the first ready at Heathrow within three weeks. Thereafter, they will become much more widely available in terms of the capacity to manufacture them and put them in place and the need to get from the various airline companies their authority, agreement and input.
	The hon. Gentleman talked about the EU situation. That was clarified just before Christmas when, thankfully, the Commission agreed that there were no Community issues about the transfer of information. That obviously still requires the countries transferring the information to agree their data-processing techniques, but there is no EU issue; that is what the Commission was originally looking at.
	The third point was about our use of intelligence and our co-operation with the United States. As I said, the Prime Minister was absolutely right that we did share information with the US. We do not routinely comment on the nature of such information or the information itself. None of that information suggested that Abdulmutallab was planning a terrorist plot. Incidentally, as I mentioned, I met Jane Lute, the Deputy Secretary for Homeland Security, this morning, and she did not mention this matter at all. We spoke about the productive way we can work together to deal with these issues. There is absolutely no relationship in the world stronger than the relationship between the UK and the US, particularly on counter-terrorism, where we work closely together and will continue to do so in the light of this latest threat.

Christopher Huhne: I, too, thank the Home Secretary for early sight of his statement.
	The Home Secretary's announcement that scanners are to be rolled out quickly at British airports is certainly welcome. However, his statement raises several questions. First, can he confirm that such scanners would have been effective in detecting the substances carried by Umah Farouk Abdulmutallab? Secondly, why has it taken him so long to act, given that these scanners have already been trialled and that four are reported to be in storage at Heathrow? Thirdly, will he respect those who may have a deep-felt objection to the scanners by allowing them to opt instead for a body-pat search, for example as part of his code of conduct? What assurance will he give that images of children and others will not be stored?
	The Home Secretary opens the door to profiling, but what does this mean? If he means additional searches for those with suspicious travel patterns, then I am sure that I speak for everybody in this House when I ask who could object? But if he means stopping everyone who looks Asian, then I fear that he will alienate exactly those communities whose co-operation we need in the fight against terrorism. Which is it?
	Then there is information sharing, which the Home Secretary really cannot dismiss by saying that the Government do not comment on intelligence matters, particularly in the light of recent events in Downing street. Can he confirm the account of a Downing street spokesman that Britain told US intelligence more than a year ago that the Detroit bomber had links to extremists? Can he confirm-this is not an intelligence matter-that the US was informed after that person was placed on a UK watch list? In the light of those contradictions and the open spat with our closest ally, what measures are the Government taking to improve liaison with the United States, or possibly with the Prime Minister's press operation?
	Given that the Detroit bomber transited through Schiphol, were the Dutch authorities notified bilaterally of our concerns at any point? Had we shared our information with our European partners through either Europol or other routes, and what mechanism is there for one EU country to become aware of such intelligence on a suspected radical held or collected by another EU country? Do we routinely share information about our watch lists with our European counterparts even for passengers who are only in transit? In the light of the attempted attack, do those systems need to be improved?

Alan Johnson: On whether scanners would have been effective in relation to Abdulmutallab, the indications are that given where the PETN was placed, there would have been a 50 to 60 per cent. chance of its being detected. That is the view of most people who operate the scanners, so the scanners themselves are not the magic bullet. A British company, Smiths Industries, is developing the technology all the time, and we need the next wave of technology with explosive detection as well as body imaging to move ahead very quickly.
	I do not accept that we took a long time to act. This happened on Christmas day, and over the Christmas period my colleague the Secretary of State for Transport has been discussing with the airlines the availability of equipment. There was one body scanner at Manchester and a number have been mothballed in Heathrow on a trial basis, but whether they are serviceable or need to be updated has been the subject of the conversation. Today's announcement is the earliest possible time to get moving.
	The issue of privacy will be important, but all the images are destroyed immediately and the person responsible for the scanning is in a completely separate room, as anybody who has seen the system in Manchester or the version in Glasgow operating will know, so there is no immediate contact between the person doing the imaging and the person being imaged. Privacy considerations are important, but I believe that we can ensure that those who have concerns can be satisfied. I do not foresee a situation in which people can simply object to a body scan. We need to use the scanners perhaps not as the first line of our defence but as the second line, on a random basis.
	The hon. Gentleman mentioned the important issue of profiling. I said in my statement that I recognised the sensitivities of that matter. Anyone can examine the case of Anne Mary Murphy in 1986, who was a pregnant woman inveigled by her Syrian boyfriend to carry a bomb on to a flight to London. She would not have matched any profile, and in the case of someone like Richard Reid the name would not have alerted anyone. Nevertheless, whether we can deal with sensitivity issues must be part of our consideration of any defence that we can find to address the gap in our defences that Abdulmutallab found, although he was thankfully unsuccessful. We need to consider profiling while recognising the concerns and civil rights issues involved.
	We share information all the time on a routine basis, and the US shares information with us. We did not inform the US that Abdulmutallab was on our watch list having been refused a student visa, because the case was not conducted with any concern that he was coming over to commit a terrorism incident. It was an immigration issue, and we would not share such information routinely with the US. We share other information with the US, and we share it routinely with our European partners, although if there were concerns about terrorism we would not wait for a watch list and for the plane to be taking off. It is outside Europe that we have the problem; as the hon. Gentleman well knows, we have a close relationship within the EU, which means that we deal with such security issues straight away. We do not wait for people to come to an airport and try to get on a plane to another country.

Several hon. Members: rose -

Mr. Speaker: Order. No fewer than 16 hon. Members are seeking to catch my eye. As always, I should like to accommodate everybody, and the numbers should be perfectly manageable. I simply remind the House that there are two further statements to follow, and I reiterate my usual appeal for each hon. Member to ask a single, short supplementary question and, of course, for the Home Secretary to provide us with an economical reply.

Keith Vaz: The Home Affairs Committee recently visited both Heathrow and Schiphol, and the Home Secretary is right to consult the airlines and be measured in his response. Of course, in principle, we should have the body scanners, but international co-operation is the most important aspect. I accept what he says about sharing information, but are there any more lessons to be learned about how we can improve the situation?

Alan Johnson: Doubtless there are. I recognise my right hon. Friend's expertise in the matter. In some countries, there are separate watch lists for security, for policing and crime, for people who have lost their passports and for immigration issues, but an integrated watch list serves us well. With e-Borders continually coming on stream, we can deal with the matter before the person has taken off. That is important, given that Abdulmutallab was not trying to enter a country, but to blow himself up before he landed. Whether he was in transit or his destination was this country did not therefore matter. We need to ensure the tightest possible control. Although it all worked well, I would be the last person to appear complacent. As the Prime Minister said, the incident is a wake-up call-every failed terrorist attempt must be picked to pieces so that we find anything that we can use to strengthen our defences. We intend to do that.

Ian Taylor: Terrorists watch very carefully the technology that we deploy. Does the Home Secretary realise that the term "scanners" covers a wide range of things? Some use millimetre technology; others use terahertz; some require one to go through a box, and others can scan remotely in airport lounges or railway stations. Will the Government please institute a research programme? Several British companies are involved in such research, but the Government never pull through new technologies. We need to stay ahead of the terrorists, not deploy after an incident.

Alan Johnson: The hon. Gentleman makes a valuable point. I do not accept that we have been slow in dealing with this. We are due to meet Smiths Industries shortly, and the document that Lord West, our security Minister, produced in August 2009 was specifically aimed at the scientific community and innovators to get things moving and find new ways to deal with such matters. It is important to stress that there is a great deal of British technology that we can exploit. We need to ensure that we get the right body scanners-that is one reason for talking to the airlines. The hon. Gentleman is right to say that there is a variety of scanners, and we need to use the most effective.

John Reid: I refer the House to my interests in the Register of Members' Financial Interests. I welcome in particular the way in which the Home Secretary emphasised that there is no magic bullet for solving the problems. I say that in the light of recent media comments, particularly about full body scanners, which still require standardised procedures, are still in trials and so on. A range of search procedures and technologies is required. Above all, as the hon. Member for Esher and Walton (Mr. Taylor) said, constant innovation in our thinking must be embedded in everything that we do. Will the Home Secretary therefore build on Lord West's good work and ensure that a partnership of the Government, academia and private industry is given more resources so that we can we stay ahead of the curve and the terrorists' thinking in introducing new ways of terror?

Alan Johnson: My right hon. Friend largely makes the same point as the hon. Member for Esher and Walton (Mr. Taylor). I agree with it. It is perhaps another reason for redoubling our efforts to stay ahead of the terrorists. We will not deal with the matter through body scanners alone. Every day, sniffer dogs come into the Chamber, looking for PETN. Behavioural detection is another method, but even with all the techniques we can use, we can never guarantee 100 per cent. safety-there is no magic bullet. However, a lot of people out there are willing to innovate, work and provide equipment and the technological capacity that can move us to the next level. That is the main lesson of Detroit on 25 December.

Robert Key: The Home Secretary is the lead on homeland security, but will he acknowledge the debt we owe to the Ministry of Defence personnel and the scientific civil servants working at defence science and technology laboratories at Porton Down in my constituency, and particularly at the Counter Terrorism Science and Technology Centre, who are responsible for the day-by-day innovation that goes on in science and technology? Will he talk to the Ministry of Defence, which has tremendous budget problems, to ensure not only that there is no cut in the defence budget as it affects Porton Down, but that quite the reverse happens? Porton Down should have all the resources it needs to counter terrorism.

Alan Johnson: The hon. Gentleman is a great advocate for Porton Down. I am talking to the Defence Secretary. This is a cross-Government initiative. All the relevant Departments are working together on this, using all the agencies at their disposal, Porton Down being one of them.

Louise Ellman: Aviation is international. What new steps are being taken to link intelligence information with the best attainable system of security at individual airports?

Alan Johnson: My hon. Friend is the Chairman of the Transport Committee, and I know that she has taken a great interest in this issue. I talked to Jane Lute this morning-she is the US Deputy Secretary for Homeland Security-about the best way to have an international gathering to discuss the lessons emerging from this and we are still talking things through. There was a view that we should perhaps get a gathering of Ministers together next week in Brussels. Actually, the opportunity under the Spanish presidency, which is very interested in this matter, comes up in a few weeks' time. More and more we are centring on that as the opportunity to get Transport Ministers, homeland security Ministers and perhaps Defence Ministers together to talk about an integrated programme as to how we can act internationally.
	My hon. Friend is absolutely right: this will not be solved by us nationally, by its very definition-a Nigerian coming from Nigeria through Holland to bomb Detroit has ramifications for a much wider set of countries. We need to deal with this matter internationally, which is what we intend to do.

Bernard Jenkin: Who authorised the Downing street spokesman to brief so emphatically that information about the Detroit bomber had been passed to the Americans before the bombing?

Alan Johnson: I am not getting into who authorised whom to say what. What the Prime Minister said about us exchanging information with the US was absolutely right. As I said in my statement, none of that information remotely suggested that Abdulmutallab was planning an attack on Detroit.

Andrew Miller: One resource we could use better is the eyes and ears of the travelling public. Will my right hon. Friend consider creating a central reporting point for members of the public who spot lapses in security in airports from which they are travelling to the UK?

Alan Johnson: I will consider my hon. Friend's suggestion. Of course, there are plenty of opportunities for people to report such things. There was a programme over Christmas about the 999 emergency service being used spuriously, but certainly for anyone who has the slightest fear that there is a security problem, that is one course of action, and there are others. He makes a good point, and we will look at whether we can make it easier for the travelling public to report any suspicions they have.

Pete Wishart: As the Home Secretary is no doubt aware, the only UK airport to be subject to terrorist attack is in Scotland-Glasgow airport. Can Scottish airports therefore expect to be among the first in line for full-body scanners? Will he assure me that he will be working hand in glove with the Scottish Government to ensure that Scottish airports are as safe as possible?

Alan Johnson: I can assure the hon. Gentleman on both those points. We need to talk to the airlines about which airports are first. I believe that Heathrow will feature, given the huge amount of transit-we are talking about transit passengers as well because, as we should remember, Abdulmutallab was a transit passenger in Holland and was not searched properly-but other airports, including Glasgow, will be very much part of the discussion. Indeed, I believe discussions with the Scottish Government have already started.

Alan Keen: We are obviously concerned today with the immediate threats, but may I pass on a warning to the Home Secretary from constituents of mine who have worked their whole lives in Heathrow airport, and the Unite union, that there has been talk of introducing competition between terminals? Will he ensure that security always comes before competition?

Alan Johnson: I can give that assurance, although I am not sure what my hon. Friend means about competition. Security, whether at terminal 1, 2, 3, 4 or 5, is the absolute priority, not competition between terminals.

Hugh Robertson: In the wake of the failed bombing, many in the intelligence community have expressed concerns about the activities of schools-or karatus-in northern Nigeria and the role that they play in radicalising young men and preparing them for jihad. In the international strand of the Home Secretary's work, which he mentioned in his statement, can he confirm that those schools will be swept up in that and that he has had discussions with his counterparts in the Foreign Office to ensure that those schools are properly addressed?

Alan Johnson: Again, the hon. Gentleman makes an important point. Of course, Abdulmutallab himself went to a British school, but it is an important issue that I need to discuss with the Foreign Secretary to ensure that we are doing everything that we can, not just on airport security, but-as I said in my statement-to prevent radicalisation taking place in the first instance, whether in this country or abroad.

Fiona Mactaggart: There have been some interesting proposals about investing in research on the technology required to detect terror. Although the Home Secretary acknowledged in his statement the risks of identity-based profiling, I am concerned that we will not have sufficiently robust research into the effects of such profiling on young Asian or Muslim men who think that they are expected to behave in a certain way and therefore think, "Why don't I?" Can he assure the House that robust research will be done on the potential consequences of identity-based profiling before any such proposal is introduced?

Alan Johnson: I can give my hon. Friend that assurance, but behavioural detection is different from profiling. Behavioural detection is used by British Transport police, who are trained in it, to observe individuals and how they act around uniformed officers as a preliminary to a possible search or questioning. On profiling, I recognise not only the sensitivities and civil liberties issues that were raised by the Liberal Democrat spokesman, but the possibility that the terrorists-who, as we have said, are one step ahead-will use our main weapon against them to their advantage by using people who do not fit the profile, such as pregnant women or old gentlemen like me. That is the other danger of profiling, and we need to be very careful. I am acutely aware of that, but it would be strange if, in response to Detroit, we did not thoroughly explore all the different elements and options-some of which may be discarded.

Ben Wallace: This is a bit rich from this Government who year on year have cut the research budget that allowed our law enforcement agencies to stay at least one step ahead of the terrorists. When I developed the millimetre wave with the team at QinetiQ, before I came into this House, we had to go to the Americans to get the funding because the Government cut it. What concrete extra resources will the Home Secretary put into the further development of technologies and manning at airports to ensure that our borders are more secure?

Alan Johnson: I know that the hon. Gentleman has some experience in this field, but I just do not understand the criticism of this Government for what we have invested in science. The hon. Member for Esher and Walton (Mr. Taylor) is no longer in his place, but he has continually praised the Government for the 10-year science and innovation project and the fact that, when I was Secretary of State at the old Department of Trade and Industry, more than half of my budget was for science. It was also ring-fenced, which was frustrating at times because I could not touch it for other things. Criticise this Government for many things, but do not criticise us for our investment in science.

Parmjit Dhanda: How will my right hon. Friend consult on and communicate any changes that are made in profiling? It is very difficult, because changes need to be made in a way that does not trigger people's knowledge that we are doing such things, but it is also important to avoid unnecessary community tensions.

Alan Johnson: I take my hon. Friend's point. There would be no benefit in even studying the use of profiling if we were not talking to groups representing different ethnic minorities in this country. We have to take them along with us on this. My hon. Friend the Member for Birmingham, Sparkbrook and Small Heath (Mr. Godsiff) actually supports the use of profiling, and there will be different views in different communities and ethnic minorities. All I am saying is that it would be irresponsible not to look at whether profiling can play a part in strengthening our defences.

Philip Hollobone: If we are to search people more thoroughly and introduce body scanners, we will need far more space and personnel at our airports. Given that most of our airports seem to be crammed full of duty-free boutiques, will the Home Secretary make it clear to airport operators that security matters have to come first?

Alan Johnson: I see an advantage for our alcohol policy coming up here. Perhaps the hon. Gentleman is inviting me to change the use of space at airports. This is one of the important discussions that we have to have with airport authorities and airlines: physically how we can do this properly with the minimum of inconvenience to the public and ensure that people can go about their daily business. That is an important part of these discussions.

Bob Spink: May we have stronger action to deport immediately those people in this country suspected of promoting extremism and of becoming radicalised? May we include in that list those who would hold offensive marches?

Alan Johnson: We always keep such issues under review. As I said in my statement, it is important that we do not take action simply because people have views that we find abhorrent but which are not illegal. We are a democracy, and there needs to be proper debate on our university campuses. It would be totally counter-productive for us to be heavy-handed in that respect. Through the Prevent strategy we are strengthening institutions, helping individuals and providing information, facts and advice to those who want to counter some of these radical views. As part of that, of course, we deport, and seek to deport, lots of people; many are queuing up for deportation at the moment. However, in a democracy, they have their right to judicial review and to go to the European Court. All of that, of course, is important, but at the end of the day they will be deported, providing we have done our job properly.

Shailesh Vara: Given the strong links that Umah Farouk Abdulmutallab had with Britain, can the Home Secretary tell us whether, in due course, the British police will have an opportunity to question him, particularly with a view to ascertaining any continuing links that he might have with Britons and what those links are all about?

Alan Johnson: All I can say at this stage is that two Metropolitan police officers are working with the FBI in America on the case. As the hon. Gentleman will have seen on his television screen over Christmas, the police took immediate action in this country. We do not comment on current police operations, and we will have to wait for them to come to a conclusion. That might well involve the British police wishing to ask questions, but we will have to see how the operation goes.

Andrew Pelling: I have had e-mails from constituents expressing concern about health risks and dignity as a result of the use of the scanners. Can the Home Secretary say anything on the public record to reassure people about such matters?

Alan Johnson: My understanding is that there is less radiation from a body scanner than from the flight itself. On privacy, as I have mentioned, we can probably think and do more, but at the moment all the images are destroyed immediately and the person operating the machine is remote from the person being scanned, which means that there is no face-to-face contact-they are anonymous while being scanned. However, it is difficult to get around the privacy issues, given where Abdulmutallab was trying to hide his explosives. If that is how terrorists seek to get around such issues, obviously we might have to be a little less delicate about privacy if we are to counter the threat effectively.

Copenhagen Climate Change Conference

Edward Miliband: With permission, Mr. Speaker, I would like to make a statement about December's Copenhagen climate change conference, at which I represented the United Kingdom alongside my right hon. Friend the Prime Minister. Today I want to report back to the House and set out where we go next in the global battle against climate change.
	Let me say at the outset that the outcome of Copenhagen was disappointing in a number of respects. We are disappointed that Copenhagen did not establish a clear timetable for a legal treaty and that we do not yet have the commitments to cuts in emissions that we were looking for. However, I also want to report to the House the significant progress that the accord agreed at Copenhagen marks and explain how we can build on the progress that was made.
	The Copenhagen accord, which is available in the Library, was agreed by a group representing 49 developed and developing countries that together account for more than 80 per cent. of global emissions. The key points of the accord are as follows. It endorses the limit of 2° C in warming as the benchmark for global progress on climate change. Unlike with every previous agreement, not just developed, but all leading developing countries have agreed to make specific commitments to tackling emissions, to be lodged in the agreement by 31 January.
	Also for the first time, so that we can be assured that countries are acting as they say they will act, all countries have signed up to the comprehensive measurement, reporting and verification of progress. On finance, significant commitments have been made by the rich world to developing countries. They include fast-start finance worth $10 billion a year by 2012, with a total of up to $2.4 billion from the UK, and specific support to tackle deforestation. In the longer term, the accord supported the goal, first set by the Prime Minister, of $100 billion a year of public and private finance for developing countries by 2020.
	By any measure, those are important steps forward, but we know that the world needs to go much further. We need more certainty and a greater scale of ambition. So the urgent task ahead is to broaden, deepen and strengthen the commitments that were made in Copenhagen, drawing on the large coalition of countries that wanted more from the agreement. Broadening the commitments is vital. Forty-nine countries signing up to the agreement is not enough. To tackle the global problem, we need a wider group. The United Nations is seeking to persuade all countries to sign up to the accord, and the UK is determined to play its part in making that happen.
	In addition, we must act to deepen the commitments on emissions made by countries across the world. Lord Stern has shown that if nations make the biggest emissions cuts in the range that they have put forward, we can be within striking distance of the two-degree pathway that we need, including with the peaking of global emissions by 2020. We know that that is in our economic as well as our environmental interests. Greater certainty about emissions is necessary to provide the strongest incentive to business, including through the carbon price. So we will work to persuade other countries that we all need to show the highest levels of ambition on emissions as part of the commitments that we make. For Europe, provided that there is high ambition from others, that means carrying forward our commitment to moving from 20 to 30 per cent. reductions by 2020 compared with 1990. We must also act to strengthen the accord, including by continuing our efforts to secure a legally binding framework. In taking on clear commitments and actions, we should recognise how far major developing countries have come in the past year. However, we must also seek to allay their concern that they will be constrained from growth and development by the demands of a legal treaty.
	We must draw on the coalition between some of the world's richest developed countries and some of the world's poorest and most vulnerable developing countries, such as Ethiopia and the Maldives, all of which want a legally binding structure. Strengthening the accord also means that richer countries must make good on the promises made on fast-start finance and show that we can fully fund the longer-term goal of $100 billion, one of the tasks for the high-level panel on sources of revenue that was agreed in the accord.
	Those efforts to make progress on substance must, in our view, be accompanied by reform of the process of decision making. The conference was held up by disagreements over procedure: which text negotiators should look at and whether, as in Kyoto, a representative group of countries could be formed to avoid having to discuss everything in a plenary of 192 nations. Those disputes about process meant that it was not until 3 am on Friday, the last day of a two-week conference, that substantive negotiations began on what became the Copenhagen accord. By then there was simply too little time to bridge some of the differences that existed. We need to find better ways of running the process of negotiation, so I welcome the UN Secretary-General's decision to look again at those issues.
	We also welcome the decision by Chancellor Merkel to host a conference as part of the mid-year negotiations in Bonn, and we will work with the incoming Mexican presidency, which will be hosting the next conference in November. But dialogue and negotiations need to restart before June-something I made clear to Yvo de Boer, the executive secretary of the convention on climate change when I met him in London just before Christmas.
	In looking back at Copenhagen, we must bear in mind that reaching agreement would inevitably be tough because we were seeking consensus among 192 countries. Like most ambitious efforts, it was always going to be difficult to succeed the first time round. However, we should not let frustration with the two weeks at Copenhagen-albeit justified-obscure the historic shift that this past year has marked.
	I want to pay tribute in particular to the enormous effort of those in the UK, from the scientific community, civil society, British business and the general public, who have mobilised on climate change. Their ideas and energy helped to drive us forward over the past 12 months and during the Copenhagen conference itself. Let me assure them and the House that we are determined to strengthen and sustain the momentum behind the low-carbon transition in the UK. Building on our low-carbon transition plan, our world-leading policy on coal and our plans for nuclear, we will be making further announcements in the coming weeks and months on energy generation, household energy efficiency and transport. Following Copenhagen, as part of the work already ongoing on the road map to 2050, we are looking at whether further action is necessary to meet our low-carbon obligations, and we will report back by the time of the Budget. This will include looking at the advice of the Committee on Climate Change published last autumn.
	Internationally, thanks in large part to the deadline of Copenhagen and the mobilisation behind it, every major economy of the world now has domestic policy goals and commitments to limit its greenhouse gas emissions, including the United States, China, Japan, Russia, Brazil, India, Indonesia, South Korea, Mexico, South Africa and, of course, the EU. Throughout the world, policy is now set to improve energy efficiency, to increase investment in low-carbon power, to develop hybrid and electric vehicles and smart grids, and to reduce deforestation.
	So although Copenhagen did not meet our expectations, 2009 did see the start of a new chapter in tackling climate change across the world. This global shift might not yet have found international legal form, but scientific evidence, public opinion and business opportunity have made it irreversible. In 2010 and in the years ahead, this Government-and, I am sure, the vast majority in this House-are determined to ensure that we redouble our efforts to complete the unfinished business of Copenhagen.
	Climate change remains the biggest global challenge to humankind, and it requires a global solution. We owe it to our children, their children and the generations to come to find it. The work has started, it will continue this year, and I believe that it will succeed. The fight against climate change will be won. I commend this statement to the House.

Greg Clark: I thank the Secretary of State for giving me advance sight of his statement, and for the briefing that he kindly gave me in advance of the Copenhagen summit. It is disappointing that the Prime Minister is not making this statement, however. He missed questions in the House in order to go to Copenhagen early, and it is surprising that he has chosen not to report to the House on what he accomplished there. The Secretary of State and I share the view that we need to see global action on climate change. If Copenhagen showed one thing, it was that the discussions should not end there, and that they must continue.
	Before Copenhagen, we said that a rigorous deal should achieve three things. The first was a commitment to limiting warming to 2° C. The second was a clear focus on adapting to climate change and on finding a dependable mechanism to finance that. The third was urgent action to preserve the rain forests. On the first, the 2° C proposal was noted, as the Secretary of State said, but the accord is completely unclear about when emissions should be cut, and by how much. On the second, it is welcome that adaptation was so prominent in the discussions, but there is no clarity on the sources of finance. On the rain forests, there was once again discussion of the issue, but nothing that could be meaningfully described as a political deal, let alone a legal framework. By any objective assessment, therefore, Copenhagen was a flop.
	The question is: how do we move on from here? I wonder whether the Secretary of State and the Prime Minister, in this statement today and their remarks before Christmas, have reflected deeply enough on the implications of the outcome of Copenhagen. The Prime Minister has volunteered to lead a global campaign to make the Copenhagen accord legally binding, but what precisely is it that he would make legally binding? The accord is essentially an agreement to disagree, defined chiefly by what is absent from it. It contains nothing to indicate the scale or the timing of the carbon reductions required of the world, or indeed of any particular country. Is it still the Prime Minister's intention to lead such a global campaign for ratification?
	In the days after the conference, the Prime Minister said that the negotiations had been held to ransom by only a handful of countries, and that that must never be allowed to happen again. The Secretary of State clarified that this included China, but has he not missed a big point here? Does he not see that Copenhagen requires us to face up to what I think is an uncomfortable reality, so to blame China, India and other countries for wrecking a deal is futile because no meaningful global deal can be done without them? Do we not need to understand why these nations considered a real deal to be against the interests of their own people? This view is reflected in their insistence on including in the final text the declaration that
	"social and economic development and poverty eradication are the first and over-riding priorities of developing countries".
	In other words, the implication is that attacking climate change ranks, for them, below these priorities.
	This revealed preference on the part of India, China and other parts of the developing world cannot simply be overlooked or assumed away.  The People's Daily reported that the Chinese Government would treat talks in 2010 on a binding global deal as a struggle over "the right to develop". Does the right hon. Gentleman agree with me that the central issue is now how cutting current and future emissions can be shown to be compatible with development? Does he agree that for developed and developing countries alike, becoming less dependent on fossil fuels, using energy more productively and damaging the environment less is a pathway that can enhance the prospects for economic development, for prosperity through trade and for the reduction of poverty? If he does, will he accept that we now urgently need a new politics of climate change-one that can convince both around the negotiating table, as it failed to do in Copenhagen, and in the court of public opinion that the action we must take to guarantee the stability of the climate in the long term is also in the interests of both rich and poor in the short term?
	Does the Secretary of State agree that three shifts from how Copenhagen was conducted are required-first, the case for action should always be based on practical rather than ideological grounds; secondly, action must not be presented in sacrificial terms, but as a set of economic and wider opportunities; and, thirdly, leaders and Ministers must see it as their mission to persuade and to unify rather than to denounce and divide?

Edward Miliband: I slightly regret the tone of the hon. Gentleman's remarks. I welcomed the cross-party support for the Government's work at Copenhagen, from the hon. Gentleman himself and from those on the Liberal Democrat Benches-and, indeed, from the Leader of the Opposition and from the leader of the Liberal Democrat party. All of us who went to Copenhagen sought to get the best agreement we could and I believe that we can build on the accord that was reached. Petty and partisan remarks about my right hon. Friend the Prime Minister and others, however, really do not become the hon. Gentleman.
	Let me deal now with the hon. Gentleman's specific points. On the question of the accord and whether there should be a global campaign for it, I believe it is necessary to seek to encourage more countries to sign up to it. It is not just me that thinks that, as the President of the Maldives, Prime Minister Meles of Ethiopia and a coalition of developing and developed countries signed up to the accord. It is not an agreement to disagree. I said clearly in my remarks that it is a matter of regret that the emissions reductions were not lodged at the time of the agreement, but they will be lodged by 31 January, and I hope that those will be targets. I mentioned all the countries that have targets and we can build on that, but perhaps the hon. Gentleman did not understand that these will be lodged as part of the agreement by the end of January. As I say, it is something on which we can build. That is my first point to the hon. Gentleman.
	On the second point, of course developing countries emphasise the overriding importance of development. Indeed, the words that the hon. Gentleman cited were taken either from the Kyoto treaty or the Rio convention, which both emphasised the overriding priority of development for developing countries. I disagree with the hon. Gentleman's characterisation of how we talked about Copenhagen. When he or I talked about Copenhagen, we did not talk about it simply in sacrificial terms; we talked about it as being good for our economies. We did not talk about it simply in ideological terms either; we talked about what countries could gain from it and we talked about how it could unite rich and poor nations alike.
	I am all for slogans about the need for a new politics of climate change and all that, although I will have to talk to the hon. Gentleman at some point about what that means. I think it best to build on the progress made at Copenhagen-although it was disappointing-and, more important, the progress made over the last year, and to use the opportunities that we shall have in the coming year to secure the agreement that we did not secure at Copenhagen.

John Prescott: I attended the Copenhagen conference in my capacity as the Council of Europe's rapporteur on climate change. May I offer my congratulations to my right hon. Friend and the Prime Minister-as did many people at Copenhagen-on the leading role that they played in bringing about the Copenhagen accord? The Opposition clearly do not understand that, as at Kyoto, an agreement was reached in principle and the details will come later during years of negotiations. That is called the process of the United Nations. We did not secure a legal UN agreement because-as the House knows, and as I have constantly said-it was never possible to secure a legally binding agreement at Copenhagen. The matter will be decided in the negotiations.
	May I ask my right hon. Friend, who will be involved in those negotiations, to take into account, as one of the criteria relating to burden-sharing, the principle of common but differentiated responsibilities? May I also ask him to recognise pollution as measured per tonne? In America it is 20 tonnes per person; in Europe it is 10; in China it is 5; and in India it is 2. If we take those issues into consideration, we shall be able to combine social justice, the eradication of poverty, and growth and prosperity, along with a greater chance of agreement.

Edward Miliband: I congratulate my right hon. Friend the former Deputy Prime Minister on the role that he played at Copenhagen through the Council of Europe, and, of course, on the role that he played at Kyoto. He speaks with great wisdom on these questions. Just as it would be wrong for Government not to admit the disappointment that was part of Copenhagen, it would be ridiculous for anyone in the House to deny that any achievement has been made in the last year. That, I am afraid, was the problem with what was said by the hon. Member for Tunbridge Wells (Greg Clark).
	I agree with what my right hon. Friend said about burden-sharing and common but differentiated responsibilities. Many of us believed that we had already incorporated that principle, and indeed it is incorporated in the Copenhagen accord. I remind the House of the commitments that must be registered. In the case of developed countries, the commitment is to cuts in emissions; in the case of developing countries, including China and India-as is clear from the annexes to the agreement-it relates to actions that they are taking. However, my right hon. Friend is correct to say that common but differentiated responsibilities must be at the heart of both this accord and any future agreement.

Simon Hughes: I thank the Secretary of State for his statement, and commend his efforts and those of the Prime Minister before and during the Copenhagen conference. However, is not the honest truth that many of the efforts made at Copenhagen were too little too late, and that the Copenhagen agreement will probably go down in history as one of the only occasions on which so many world leaders came together in one place to discuss one of the most important issues and came away with so little to show for it?
	Do the Government not accept that there is no excuse for not having sorted out the procedural issues beforehand, and that there clearly was not enough political leadership during the months preceding the fortnight in Copenhagen? To ensure that there will be no more disappointing conferences and no more setbacks like that of last month, will the Secretary of State commit himself to ensuring that political leaders here and in the European Union will be engaged in all the steps of the process-all the interim meetings-rather than just leaving it to a glamorous, or in this case rather unglamorous, summit? If the United Nations Security Council can sit in permanent session, why cannot a United Nations climate council do so as well? If this is indeed the biggest crisis, there really ought to be a mechanism for dealing with it.
	As a supporter of the EU, I am sad to have to ask why it appeared to be so ineffectual on this occasion. Why did it not play the card that it had promised, and say that it would raise its target to 30 per cent. at Copenhagen? That might have triggered a much better response elsewhere. Given that it did not do that, is there not now an opportunity for the United Kingdom to propose-and for Baroness Ashton, in her new role, to propose-that the EU set a 30 per cent. target for the new decade this month? That proposal could either be contained in the accord annexe submissions that must be in by the end of January, or be submitted at the first EU summit this year.
	Why did the Commonwealth not play a more significant role? I am a huge supporter of the Commonwealth, whose fantastic diversity-ranging from the Maldives and Tuvalu to Canada, Australia and other countries-surely presents a great opportunity for countries to share their experience and be a real force for influence in the world. I hope that the Secretary of State will undertake to ensure that it plays a much bigger role in future.
	What about the US and China? How are we going to get them to sign on a dotted line and be more ambitious?
	Lastly, rather than what has been suggested in some of the post-Copenhagen comments in the British press-that measures on climate change response and emissions targets will make us uncompetitive in a competitive world-will the Government make it clear, as I know that the Secretary of State is committed to doing, that unless we get an agreement that binds everybody, we will miss the chance to have a sustainable future for all countries, not just ours? We will also miss the chance to have the sustainable jobs and sustainable, safe and secure energy on which the security of the world depends.

Edward Miliband: The hon. Gentleman asks serious questions that deserve serious answers. Let me go through them. On his question about process and why we got to the stage that we did, the mess of process partly represented big disagreements about substance, because there was concern among a number of developing countries about the notion of Denmark tabling its own text. Why did it take until 3 am on the Friday for the leaders' representatives from a group of 27 countries-representing 49 countries if the EU is included-to get together in a room? It was because the Danes were systematically prevented from tabling a text, because people kept saying, "We are not ready yet to go into a smaller room." The same thing happened at Bali and Kyoto. That was one reason why we did not bridge some of the divides-because by 3 am on the Friday there were less than 24 hours of the conference to go.
	The hon. Gentleman's other points about procedure are important and correct. The notion that negotiators should be left to negotiate, even though they take instructions from Ministers, is insufficient. His notion that there should be some kind of permanent session is also an option that should be considered. It is very important that we do not leave it until June and the mid-year negotiations in Bonn to restart the whole process. The EU needs to use its commitment to going to 30 per cent. with comparable action from others. We need to build more of a consensus than we have in the EU at the moment to move to 30 per cent., but I think that the process of 31 January commitments is an initial stage in which the EU should seek to push others to higher levels of ambition, and should itself seek to be as ambitious as possible.
	I disagree with the hon. Gentleman slightly about the Commonwealth, because it issued and pushed an important set of demands and requests regarding finance, some of which came through in the final agreement.
	On the US and China, we want the deepest cuts from all countries, including the United States, but that is dependent on its legislation. It was willing to make an initial offer before making legislation, but the legislation that went through the House of Representatives was more ambitious than the offer that was made, so there is some hope there.
	On the legal treaty and the attitude of certain developing countries, a process of persuasion is partly needed. They need to be persuaded that they have nothing to fear from the legal assurance that is, in my view, necessary. That argument has not yet been won, but there is a broad coalition of developing and developed countries that want the legal framework. That coalition is important and could help us in the months and year ahead.

Colin Challen: I, too, was in Copenhagen, and it seemed to me that one issue behind the problems that emerged from the conference was the concern about where the relevant finance should come from and go to. The Government have rightly said that not more than 10 per cent. of our official development assistance budgets would be spent on climate change finance, but may I press my right hon. Friend to go further? Will he make a commitment that that 10 per cent. will not make up the whole of our climate change finance? Perhaps it should not, at any point, make up more than 10 per cent. of our total climate change finance. The people of Bangladesh want to know that we are not simply robbing Peter to pay Paul.

Edward Miliband: My hon. Friend speaks with great authority on these issues. He is completely right to say that we have made an important commitment to ensuring that the finance that we give will be no more than 10 per cent. of official development assistance, especially after 2013, and that there will also be additional sources of funds. He is also right to imply that we need to find revenue sources to meet our commitments. We know that promises have been made in the past: although the British Government have a good record of keeping promises, it is also necessary to find the revenue sources that can provide the flow of finance, and this is where the high-level panel that I said was being set up by Ban Ki-moon is important. In particular, we need to ensure that the $100 billion goal is not just set out but is actually met. We want the panel to report back by the time of the Mexico meeting, but we hope that it will do so earlier, for example by the middle of this year.

John Gummer: The Secretary of State was right to say that the meeting was disappointing, and that is fundamentally because we do not have the confident arrangements in the world that would enable business, countries and companies to make decisions to promote mechanisms to reduce emissions. Britain's leadership in the industrial revolution means that we are responsible for a good deal of the climate change that is happening at the moment, so does the right hon. Gentleman accept that this is the moment for us to firm up on the commitments that we have made to green technology and a green future? Europe is also very responsible for today's problems, so should not Britain take the lead in ensuring that Europe firms up on its 30 per cent. pledge? More than that, should we not seek to create, as far as possible, the most encouraging atmosphere for business to do what it has to do? The leadership of business is crucial in this matter.
	Lastly, does the right hon. Gentleman agree that winning people's hearts and minds means that we have to be very clear about the advantages of doing what is being proposed, and that we should not talk in puritanical terms about sackcloth and ashes? Only by showing people that this is a remarkable opportunity for this country, Europe and the world will they come and support us.

Edward Miliband: Let me take this opportunity to say that I know that the right hon. Gentleman has announced that he is leaving this House. We will miss his expertise and passion on these issues of climate change, and we wish him well in what he does next.
	The right hon. Gentleman asked several specific questions, and I agree that the argument that we need to make is that there is much to gain from the transition to low carbon. We have made that argument already but we can do so more often, because the benefits include the jobs for people in this country and the new industries that will be created. That is true of what we in this country are doing with carbon capture and storage, and it is true in the renewables sector and across the board.
	I also agree that Europe must demonstrate its leadership role by pushing others to do more. Part of the task that we face in the accord's pledging process is to ratchet up the commitments that people make. That is something that we will be working on intensively, including in Europe this month.

Barry Gardiner: I commend my right hon. Friend for the very critical role that he played in the wee small hours, when the world's media had largely gone to bed, in ensuring that we came away from Copenhagen with something rather than nothing. Does he agree that one of the key areas in which progress can be made over the next 12 months is at national Government level? Should we not aim to align national Government policy and legislation with the GLOBE legislators forum principles set out in Copenhagen in November, before the main conference?

Edward Miliband: I agree with my hon. Friend, and thank him for his remarks about the role that I played in this difficult process. I think that GLOBE has played a very important role over the past 12 months, and that it will do so again in the future. Moreover, he draws attention to the fact that many of the targets that countries will enter into the accord will be domestically binding. Those targets will have gone through national Parliaments, and the new Indian Environment Minister has said that he wants to take legislation on India's so-called six national missions through his House. That is a big step forward, and it is important to emphasise the crucial role of legislators in this process.

John Redwood: Why are we in the northern hemisphere having such a very cold winter this year? Which climate model predicted that?

Edward Miliband: I can hardly believe that question, Mr. Deputy Speaker. The weather fluctuates, as anyone knows, and the notion that a cold spell in Britain disproves the science of climate change is something that I believe not even the right hon. Gentleman believes.

Harry Cohen: Was the delegate from Sudan right when comparing the failure at Copenhagen to a holocaust? Will not many millions be killed in this century as a result of higher temperatures and increased natural disasters including flooding and, indeed, in wars? Although the United States, China and, in my opinion, the developing world were at fault in not getting an agreement, why did the EU not put its best position on the table? What is that best position? Why is the money commitment to get the developing world on board so soft and unreliable? What are the Government going to do to strengthen that arrangement?

Edward Miliband: The remarks of the Sudanese delegate were reprehensible, as I said at the time. As I said in an earlier answer, there was not yet consensus in Europe that the commitments made by others were sufficient for Europe to move to 30 per cent. We think that Europe does need to move to 30 per cent. in the context of proper commitments from others. The process of people putting their targets on the table by 31 January is part of the process of Europe moving up.
	My hon. Friend is right to refer to the commitments on finance. I would not quite describe them as soft because they are clear commitments from leaders in the accord, but we need to have extra confidence in them by establishing the vital revenue sources. That is why the high-level panel set up by the Secretary-General is so important.

Tony Baldry: May I ask the Secretary of State a question as a vice-chairman of the all-party group on China? It was disappointing that China sought to strip out any language that would have led to Copenhagen being a treaty and to strip out any figures at all. How do the Secretary of State and colleagues in the Foreign Office see us now engaging China constructively in such a way that next time we come to this issue China engages in it rather more constructively and ambitiously?

Edward Miliband: The hon. Gentleman speaks with authority on these issues. China has moved some distance in the past two years on climate change. The very notion of a target-it set out a target of 40 to 45 per cent. reductions in carbon intensity-is important. We look forward to seeing what it lodges as part of the agreement on 31 January. We face a continuing effort, and we are determined to continue with it, to persuade China that a legal undertaking should give it confidence about others meeting their commitments, and that it will not face the constraints on growth and development that it fears. That is part of the persuasion that we need.
	The new coalition that was evident at Copenhagen between the developing countries that are particularly vulnerable to climate change-I mentioned Ethiopia and the Maldives, but there were others including other small island states and African countries-is important. That coalition wants a legal agreement. We need to find ways in which that voice can be heard and to persuade others who are more reluctant that it is the right way to go.

Jeff Ennis: My right hon. Friend will be aware that we are trying to establish what will probably be the largest carbon capture and storage project in Hatfield colliery in Doncaster in his constituency by 2015. How important is the achievement of that goal to the future economy of Yorkshire and to meeting our obligations under the climate change agenda?

Edward Miliband: I thank my hon. Friend for that question. It is very important that we make progress on carbon capture and storage, including in Yorkshire, where there are exciting plans to move forward on that process. It is also worth saying that internationally many countries are moving towards carbon capture and storage. Again, that is a change we have seen over the past couple of years; countries understand the importance CCS will play and the importance of making coal a clean fuel of the future.

Elfyn Llwyd: I am very pleased that the Secretary-General of the UN recognised that there are procedural problems and I sympathise-even empathise-with the right hon. Gentleman in his task of a few weeks ago. Clearly a standing council would be one idea worthy of note, but in the meantime is the Secretary of State aware of the fact that some officials from developed countries are talking about pressing ahead with a smaller group of 20 -a coalition of the willing for the climate? If that is so, should the UK not be taking part as well?

Edward Miliband: The hon. Gentleman raises an interesting question. My immediate response is no, in the following sense: we should stick with the UN framework, because the truth is that although it has its frustrations-not least the need to operate by consensus, and indeed, in some sense, unanimity-unless we get all countries bound in, we will have less chance of tackling the problem in the way we need to do. Our instinct, which I think is right, is to stick with the UN process and find ways of improving it, but not to go off in smaller groups, as that will not give people the assurance they need and it will not give us the environmental integrity we need.

Michael Clapham: Like my right hon. Friend, I believe that the challenge that faces mankind is climate change, and I commend him for his work in Copenhagen. There is an enormous distance in moving from an accord to a legally binding agreement. How does my right hon. Friend see the development of steps towards that legally binding agreement? Although the UN is involved in a very positive way, there is still a need to keep that momentum. What steps does he see being taken to keep up the momentum towards a legally binding agreement?

Edward Miliband: My hon. Friend asks the most difficult question of all about how we proceed. It is important to restart the negotiations, because as I said earlier, if we leave it until June we shall find the same problem of being timed out as we found at the end of the conference. Two tracks are still operating under the UN framework-the Kyoto track negotiated among the Kyoto parties and the other track on long-term co-operative action. Those two tracks could still form the basis of a legal treaty, incorporating many points from the accord. The task for us is to restart the negotiations and find a way-it really comes down to persuasion-of reassuring the relatively small number of countries worried about a legal treaty that they can actually gain from one and that they have nothing to fear from it.

Graham Stuart: No one set out for Copenhagen looking for an accord between 40-odd countries, so it is more than disappointment-Copenhagen is a failure, and the Secretary of State should not understate that. Does he agree that the opprobrium visited on China in the negotiations may be unfair and that the United States remains, if anything, the primary barrier to a global deal? What steps does he think can be taken to engage the United States more effectively if we are to see a global agreement?

Edward Miliband: The hon. Gentleman and I have talked about Copenhagen in the past. In a way I think he undersells the efforts, not necessarily of the Government but of himself and legislators all round the world. To say that an agreement that for the first time captures targets not just from developed countries but from developing countries is no step forward and represents no gain is wrong and undersells the efforts of legislators and people who have campaigned for a positive outcome.
	On the hon. Gentleman's question about the United States, all countries face difficulties in getting to the kind of ambition we need. There are two separate questions. One is about the level of ambition in any agreement-we want the maximum ambition, including from the US. The second is about the form of the agreement. My understanding of the United States position is that it is content to see movement to a legal treaty. There are others we need to persuade that a legal treaty is in their interests.

Andy Reed: Does my right hon. Friend share my concern that without Copenhagen there is a danger of a lack of focus for campaigners and others, to target their attention and pressurise their Governments to come to a legal agreement? What specific measures does he propose to put forward to the high-level panel? Although fantastic figures of $100 billion are mentioned, those of us who campaign on international development issues know, following Gleneagles, that very little of the money flows to where it is required. What lessons learned from past agreements can we deploy to ensure that $100 billion flows by 2020?

Edward Miliband: Those are two important questions. I am glad that my hon. Friend asked the first one; I should have mentioned it. It is very important that the campaign carries on-that is the lesson of Make Poverty History. We made the progress that we did, not just because Governments wanted it to happen but because people made it happen. That is why it is so important that we send an honest message about what happened at Copenhagen, but not a defeatist message that it was all in vain. I do not believe that it was all in vain.
	On my hon. Friend's second question, there is a range of options for the high-level panel to look at. People have put forward proposals on bunker fuels and on funding for some of the multilateral development banks. There is a range of options for the panel to consider, many of which were raised in the months leading up to Copenhagen.

Philip Hollobone: Despite the Secretary of State's best efforts, the failure of Copenhagen surely increases the risk that an international legally binding agreement to prevent climate change may never happen. Given that risk, at what point do the Government reprioritise efforts to adapt to climate change, rather than trying to prevent it?

Edward Miliband: It would be defeatist to say, "Let's give up on this." I am not saying that the hon. Gentleman is suggesting that we give up now, but the lesson of the past year is not that the problem is insoluble. The world has come a long distance. In a way, part of the optics of Copenhagen and some of the things that we failed to get mean that it was a disappointment, but to interpret the past year as suggesting that we are not going to tackle the problem is defeatist. The past 12 months have proved that progress can be made and that further progress can be made in the years ahead.

Adrian Bailey: Although I recognise that it may have been overly ambitious ever to expect a legally binding agreement from Copenhagen, the fact remains that manufacturing industry needs certainty, as my right hon. Friend said in his statement, and international uniformity if we are not to lose manufacturing to non-compliant areas. Will he undertake to have a close dialogue with manufacturing industry in the UK in order to do our best to ensure that our manufacturers do not lose out as a result of the failure to get a legally binding agreement in Copenhagen?

Edward Miliband: My hon. Friend is right. There is the protection that we need to give to higher carbon manufacturers, which is partly to do with the provisions under the new emissions trading scheme for free allowances, for example. With reference to the comments of the right hon. Member for Suffolk, Coastal (Mr. Gummer) and others in the House, there is also the assurance that we need to give to the low carbon manufacturers of the future that a clear signal has been sent by the world on low carbon, and we want to strengthen that signal. Both of those are important, and I absolutely undertake to do what my hon. Friend asks.

Bob Spink: I congratulate the Government on their efforts so far and, in particular, on their commitment to carbon capture and storage for power stations. However, will they redouble their efforts? The time scale for introducing large-scale carbon capture and storage demonstration plants is not ambitious enough, and we need to do more on that.

Edward Miliband: The hon. Gentleman is right that we need to be as ambitious as we can be. That is why we are bringing forward a carbon capture and storage levy as part of our Energy Bill. We hope that all parts of the House will support it and pass it as soon as possible so that we can start to fund carbon capture and storage projects.

Jim Sheridan: As part of a cross-party delegation I recently visited some of those islands in the Pacific and saw at first hand the difficulties faced by many of the poorest and most vulnerable communities in the world. Following the Copenhagen discussions, can my right hon. Friend offer any hope or support to those poor communities to stop them sinking even further into the sea?

Edward Miliband: My hon. Friend speaks very eloquently about his experiences, and I knew that he had taken that trip. He is absolutely right to say that one of the most important voices at the Copenhagen summit and, indeed, in the months before was that of the small island states. They are the most vulnerable, and all of us will remember the Maldives cabinet meeting that took place underwater to signal the dangers that they face. The finance part of the accord is important, providing immediate resources-I hope-for adaptation and mitigation, and the longer-term finance is important, too. However, the world must also take action on emissions, because in the end that as well as adaptation is what will save those small islands. That is why we need to redouble our efforts on cutting emissions.

Andrew Pelling: The Secretary of State has credited the House with a forensic analysis of the difficulties that led to the disappointment at Copenhagen, but is there perhaps someone to blame? Was it a lack of political will on the part of politicians; was it China; was it the strength of the American Congress; or was it, as he suggests, just a problem of process?

Edward Miliband: No, I do not think that I should give the impression that it was a problem of process. At a meeting early on in the negotiations, I said that every country faced compelling constraints that inhibited action on climate change. If there is a reason why we did not reach the agreement that we wanted, it is that every country faced those compelling constraints and we could not overcome them sufficiently. It was not an accident and there was no question, simply, of a badly organised meeting. There are difficult issues, but I come back to this point: the past year has shown that such compelling constraints can be overcome, and we need to spend the months and years ahead overcoming the other constraints that countries faced at Copenhagen.

Queen's Diamond Jubilee

Ian Lucas: With permission, I shall repeat a brief but important statement that my right hon. and noble Friend the Secretary of State for Business, Innovation and Skills made about the Government's plans to mark Her Majesty the Queen's diamond jubilee in 2012. It will be a landmark year for Her Majesty, Britain and the Commonwealth. Queen Victoria is the only British monarch previously to have celebrated a diamond jubilee. However modestly our present Queen might approach the celebration, I know that people throughout the country will want the chance to recognise this remarkable achievement by paying tribute to Her Majesty and by celebrating with great pride and affection Her Majesty's 60 years on the throne.
	It will also be an opportunity for us as a country to reflect on the incredible changes that have taken place both here and throughout the world over the past six decades. We want there to be a nationwide celebration, and working with colleagues in Buckingham palace and the devolved Administrations we are planning a series of fitting events to enable communities all over the country to mark the diamond jubilee.
	Although we are still in the early stages of organisation, I can confirm to the House that the celebrations will take place around the first week of June 2012. In honour of Her Majesty, we will create a special diamond jubilee weekend, moving the late May bank holiday to Monday 4 June and adding an extra bank holiday on Tuesday 5 June. In Scotland, national holidays are a devolved matter. We will work closely with the Scottish Government to help to ensure that people across the United Kingdom can celebrate the jubilee together.
	In keeping with previous jubilees, we plan to issue a diamond jubilee medal. Over the next few months, we will be considering that in more detail, including who should be eligible to receive it. In addition, we will be holding national competitions, to be launched later this year, for city status, a lord mayoralty and a lord provostship. Further details of those and other Government plans for the diamond jubilee are available from the Printed Paper Office-and the Vote Office-and online via the Department for Culture, Media and Sport website.
	Finally, I can confirm that Her Majesty has agreed, as a mark of royal favour, to confer royal borough status on the London borough of Greenwich. This rare honour is to be bestowed in recognition of the historically close links forged between Greenwich and our royal family from the middle ages to the present day, and of the borough's global significance as the home of the prime meridian, Greenwich mean time and a UNESCO world heritage site.
	Further announcements will follow as our plans for the diamond jubilee are confirmed, but I know that voluntary and local organisations will benefit from early notice of these dates.
	This will be a truly historic occasion-a testament to the hard work and dedication of Her Majesty the Queen to this country and to her people. We are committed to ensuring that celebrations take place of which we can all be proud.

George Young: I thank the Minister for advance sight of his statement, which was delivered earlier by the Business Secretary in another place.
	This afternoon the House has heard two serious and sobering statements on terrorism and climate change, so we warmly welcome the good news in today's announcement that Her Majesty's diamond jubilee will be recognised by an extra bank holiday. Conservative Members give our full support to this proposal, as indeed we did to my hon. Friend the Member for Romford (Andrew Rosindell), who put forward the idea in a ten-minute Bill that had all-party support and was given its First Reading last November.
	I join the Minister in paying tribute to the very remarkable achievements of Her Majesty during her extraordinary reign: extraordinary not just because of its length-she will be the second longest reigning monarch in British history-but because of the integrity and commitment she has brought to that role and the popular esteem in which she is held across the UK and beyond. No country could wish for a better Head of State.
	The House will remember the mood that was expressed powerfully during the celebrations for the golden jubilee in 2002. Despite being told that it was to be a low-key affair, more than 1 million people flooded to the Mall to celebrate-a clear indication of the strength of the relationship between the monarch and her people. I also remember, as will many colleagues, the celebrations in 1977 for the silver jubilee and the way in which the nation united and rejoiced at that time.
	The Minister made passing reference to the Commonwealth. Can he inform the House about exactly what arrangements have been made to ensure that the Commonwealth nations are properly represented during the celebrations? This is particularly relevant given the special importance that Her Majesty has placed on the Commonwealth and the great success that she has had in helping to build strong relations with Commonwealth Heads of State during her reign.
	May we ask for more detail on some of the Government's other plans? In particular, can the Minister confirm that his Department is considering a new youth volunteer scheme, as has been suggested in some press reports? Can he confirm that any organised celebrations will include an important role for young people?
	Will the Minister clarify whether arrangements have been made for acknowledging the Olympics during this event? The Government initially indicated that they wanted to link those two events in a single celebration. Can he now confirm, as we hope, that that idea has been permanently shelved?
	May I add my congratulations to the London borough of Greenwich on its new auspicious status? It holds a special place in our nation's history, and it is right for it to be honoured in this way. We also welcome the creation of a new medal of service.
	Finally, can we ensure that the House of Commons is part of the celebrations? I am sure that all Members across the House will wish to mark this important occasion, and I think that all colleagues would agree that it is right that the House should show its respect for Her Majesty and, indeed, for Prince Philip, and the tireless public service that they have offered this country for 60 years.

Ian Lucas: I am very grateful for the right hon. Gentleman's characteristically kind and good-humoured response, and of course for the full support that he has offered for the announcement today. I am sure that we will carry forward that support in preparing for the celebrations ahead.
	The right hon. Gentleman referred to the Commonwealth, as I did in my statement. Of course, Her Majesty has been very successful in developing the strong bonds between the United Kingdom and the Commonwealth throughout her reign. It is important that we take into account the full views of the Commonwealth, and as we prepare we will have the opportunity to involve the Commonwealth in the year as a whole and in the celebrations on the bank holiday.
	Another important group that should definitely be involved is young people, as the right hon. Gentleman said. I cannot confirm the press reports relating to the new youth volunteer scheme. We are in the process of discussions at the present time, and of course we will keep the House fully informed.
	It is very important that the diamond jubilee celebration is seen as a distinct, almost unique celebration in British history and the history of the Commonwealth, because there has been only one diamond jubilee celebration before. I therefore agree with the right hon. Gentleman that it should be seen as distinct from the Olympics, which of course happen to be in the same year but are not linked to it. The diamond jubilee is to celebrate the commitment and work that Her Majesty has given the nation over 60 years.
	It is of course important that the House of Commons be involved, and I am sure that all Members will ensure that that happens when the time comes.

Nick Raynsford: I thank my hon. Friend for his statement and wholeheartedly endorse his remarks and those of the right hon. Member for North-West Hampshire (Sir George Young) about the appropriateness of celebrations to commemorate Her Majesty's remarkable 60 years' service to this country, of which we are all deeply proud.
	I particularly welcome my hon. Friend's announcement about the significant honour bestowed on the borough of Greenwich, which will be very warmly welcomed throughout my constituency. In his statement, he acknowledged the significant achievements in the area. In view of his business promotion responsibilities, does he agree that 2012, which will be not just the jubilee but the year of the Olympics, in which Greenwich will host many of the most significant events, provides a golden opportunity to promote the area's already successful but further developing industries in the field of leisure, cultural activities, tourism and hospitality?

Ian Lucas: I had a feeling that my right hon. Friend would be here today. He is in the fortunate position of representing the royal borough of Greenwich, as we have said it will be in future. It is an extraordinary constituency and an extraordinary place, and it has strong historic links with the royal family, which is one reason for the announcement today. The year 2012 will be very special, and I urge anyone from across the UK who has not visited Greenwich so to do. It is one of my favourite parts of the UK, and the announcement is richly deserved.

Lorely Burt: I thank the Minister for previous sight of the statement.
	In 2012, our Queen will have served her people for a whole 60 years, which is a long working life in anybody's book and deserves to be commemorated. That will be done in a lot of imaginative ways, and we look forward to hearing more suggestions for celebrations. We hope that they will be truly inclusive, and I am sure that they will.
	It is welcome that all the Queen's subjects can join in the celebrations on her official birthday, but a bank holiday attracts a cost to industry. The CBI estimates that every bank holiday costs £6 billion, and the Federation of Small Businesses applauds the sentiment but notes the cost, especially to small businesses. However, we welcome this day of celebration for the only monarch who has reigned for so long, with the exception of Queen Victoria, and for someone who has served her subjects so well. We welcome the bank holiday and the celebration, because you're worth it, Ma'am.

Ian Lucas: I am very pleased that the hon. Lady welcomes the celebration.

Andrew Rosindell: I commend the Minister and the Government for the splendid announcement-it will be welcomed by people the length and breadth of the United Kingdom. We look forward to a magnificent celebration of the Queen's diamond jubilee in 2012.
	Will the Minister please bear in mind the importance of involving Her Majesty's subjects in the other 15 realms, particularly Australia, New Zealand and Canada and, of course, in the 21 Crown dependencies and overseas territories? They are all Her Majesty's subjects and it is important that they, too, are included in the celebrations. I remember the silver jubilee of 1977, when the Royal Canadian mounted police were here for the parade in London. Will he consider issuing invitations throughout the Commonwealth to make it a truly magnificent celebration for Her Majesty?

Ian Lucas: I will of course consider all the hon. Gentleman's suggestions. I was present to listen to his introducing his ten-minute Bill, and we have responded to that as part of the consultation and discussions that have already taken place. As I have said, it is important that the Commonwealth, the Crown dependencies and all subjects are involved in the celebrations. We want to try to ensure that.

Andrew Murrison: In 2002, a golden jubilee medal was struck for the armed forces and other uniformed services. The qualification period for it was five years before 2002. If similar criteria were used for the diamond jubilee medal, those serving between 2002 and 2007 would be disfranchised. Paradoxically, that is a period in which our armed forces have been engaged in two major theatres of war. In setting his criteria-a difficult task-will the Minister bear those people in mind to ensure that their contribution and service to Her Majesty the Queen are properly recognised?

Ian Lucas: The hon. Gentleman makes an important point. The criteria for the diamond jubilee medal have not yet been established. We are still in the process of taking into account issues such as those that he raises. We will of course consider them closely.

Gregory Barker: I was in the Mall with my son for the golden jubilee celebrations, which were terrific. For the diamond jubilee, will the Minister consider an even more enhanced role for our armed services? There is a particular bond between the Queen and the armed services, and we are now dependent on them and in their debt more than at any other point during her reign. If all the regiments could be recognised-and perhaps an invitation issued to all those who marched in her coronation parade or their successor organisations-it would be great. A particular focus on the armed forces for the diamond jubilee would be very welcome.

Ian Lucas: We are, of course, all very much aware of our debt to the armed services, particularly at this time. The hon. Gentleman's positive suggestions will be taken into account.

Bob Russell: The announcement will be welcomed by the Scout and Guide movements in particular, as well as by calendar manufacturers-such as Rose printers of Colchester-which have to work two years in advance, so I appreciate notice of the bank holiday.
	Will the Minister elaborate on his reference to national competitions for city status? I recall that, for the golden jubilee, England was disproportionately discriminated against. I therefore urge the Government to ensure that towns in England are treated more favourably than they were for the golden jubilee.

Ian Lucas: There will be a further announcement on the city status competition, which will set out the criteria in detail. I am aware of the strength of feeling in English towns. There is also strong feeling in my town of Wrexham-we believe that our town should have city status, too. Like the hon. Gentleman, I may be able to issue a press release after the statement.

Tony Baldry: The present Banbury cross was built following public subscription to celebrate the wedding of Princess Victoria, Queen Victoria's eldest daughter. I am sure that the people of a borough such as Banbury will want to mark the Queen's diamond jubilee by some similar but modern, 21st-century memorial and tribute. Will the Minister discuss with his colleague the Lord President of the Council whether he could approach the appropriate officials at the palace to ensure that we have a suitable fundraising logo that could be used locally by the authorities in the respective counties and by the respective lord lieutenants? In that way, there will be some focus in each county that the lord lieutenant could oversee, and it would ensure that fundraising can be organised in a structured way for local tributes for the Queen's diamond jubilee.

Ian Lucas: It would be helpful if the hon. Gentleman wrote to me with the details of his suggestion, and I will undertake to try to take it forward on his behalf.

Philip Hollobone: Up and down the country, there are jubilee halls, bridges, parks, gardens and other local memorials. What steps will the Department for Culture, Media and Sport take to encourage such local celebration of the diamond jubilee in 2012?

Ian Lucas: It is for the DCMS to set out the steps that it will take, but I will be happy to liaise with it on any proposals that need to be taken forward regarding the issues the hon. Gentleman raises.

Lembit �pik: As a citizen who has always preferred the idea of a monarchy to a republic, I welcome the opportunity to celebrate this wonderful forthcoming jubilee. Will the Government consider a fund from the public purse to ensure that local authorities and local communities can truly celebrate the monarchy that we love, and to which all of us are loyal-I hope-on that very important day?

Ian Lucas: With the Chancellor of the Exchequer sitting to my left, I am very reluctant to make any financial commitments at this juncture, but I am sure that there will be engagement right across the United Kingdom on the jubilee, that people will be determined to carry forward celebrations, and that they will be committed to fundraising in order so to do.

Andrew Pelling: Queen Victoria's glorious diamond jubilee was also held in June. It is an historic part of her reign that is very much remembered. The Minister talked about the importance of this jubilee being an historic occasion, but how can the Government assist in ensuring that it is?

Ian Lucas: The hon. Gentleman is quite correct-this has happened only once before in British history, so it is a genuinely historic and virtually unique occasion. We need to think carefully about it, and to hear from hon. Members and the general public, because we want to make the jubilee something that is remembered for generations to come.

Bob Spink: Does the Minister agree that the Queen should try to visit each of the Olympic sites? May I invite her to Hadleigh which, with Hadleigh castle, has very strong historical royal connections? She would receive an extremely warm welcome there.

Ian Lucas: I am sure that Her Majesty has heard that kind invitation and that the palace will consider it carefully.

Point of Order

John Gummer: On a point of order, Mr. Deputy Speaker. We had a statement today on climate change. It was circulated in the House of Commons in very large type, suitable for reading by the Government spokesman, and the backs of the pieces of paper were uncovered. If we are going to do something about climate change, could we start in this House of Commons, and ensure that statements are first of all written in print that is not so big, so that we use less paper, and secondly that they are printed on both sides of the paper? After all, equipment for doing that has been available for a very long time and we might do our little bit towards climate change.

Mr. Deputy Speaker: I am quite sure the right hon. Gentleman is well aware that those are not matters over which I have a great deal of jurisdiction, but I am sure that the whole House has noted his points, and perhaps they will be taken into consideration when statements are produced in future.

Fiscal Responsibility Bill

Second Reading

Mr. Deputy Speaker: May I inform the House that Mr. Speaker has selected the amendment standing in the name of the Leader of the Opposition?

Alistair Darling: I beg to move, That the Bill be now read a Second time.
	We are debating the pre-Budget report more fully on Thursday, so this evening I will confine my remarks to the Bill. Every country in the world has been hit by a severe financial crisis, resulting in the worst global economic recession for decades. Inevitably, borrowing and debt levels have risen as revenues have fallen. We are affected by that; so is every other major economy in the world. Like other countries, we are now taking steps as we emerge from the recession to secure growth while reducing the deficit, but as I have said on a number of occasions, we have got to do that in a way that does not risk wrecking the recovery and damaging the economy, and our ability to secure growth over the medium and long term.
	The deficit reduction plan to halve the deficit over a four-year period is a very important part of that strategy. The Bill will set out obligations to cut the deficit at an appropriate and sensible pace, and it will allow us to protect the economy and maintain public services, upon which growth and members of the public depend. That is an important part of what we are trying to do.
	Whatever the economic circumstances under whatever Government, we need rules and objectives to govern fiscal policy. Between 1979 and 1997 during the previous Conservative Government, there were many different targets. Between 1980 and 1997, monetary policy targets changed 14 times and there were at least five different fiscal policy objectives. In fact, I believe that there was no clear and consistent objective of fiscal policy. The result was the lack of a clear objective and overall coherence, which meant, among other things, that we had interest rates peaking at 15 per cent. in 1990, instead of half of that, recorded over the 12 years since 1997.

John Redwood: In 2015 and 2016 under the Bill, if national income rises, the Government can put borrowing up and still meet the requirements. However, if national income fell, they would have to cut. Is not that the very opposite of the natural stabilisers the Chancellor normally recommends?

Alistair Darling: No. It is important that the right hon. Gentleman recognises that the Bill requires the Government, in line with the proposals I set out in the Budget and the pre-Budget report, to halve our borrowing over a four-year period, which I believe is absolutely essential. The measures I have set out will enable us to do that, but it is important that we do it in a way that supports and does not damage the economy. Indeed, this is one of the differences between the Government and the Opposition. One reason why we should not go further at the moment is that going further and faster, and bringing forward that deficit reduction, would be damaging to the economy. We are supporting the economy now because we are not yet out of recession. We need to ensure that we have the support of public expenditure, which is keeping the economy going, and supporting the public, businesses and families.

Several hon. Members: rose -

Alistair Darling: I will give way, but I shall first finish dealing with the point made by the right hon. Member for Wokingham (Mr. Redwood). It is important that we have that discipline. As I was saying, every Government must have a discipline in relation to their fiscal policy and the discipline I set out is important.

George Osborne: Will the Chancellor confirm what he just said-that we are not yet out of recession at the beginning of January 2010?

Alistair Darling: I have said so-we have not yet had the figures for the fourth quarter of last year. I have said before on many occasions that I believe we will come out of recession at the turn of the year, but we will not have those figures until later this month. Had I said otherwise, the hon. Gentleman would be the first to jump up and say that we do not have the figures, which we do not.

William Cash: As the Chancellor knows, I have raised the question of the true state of the debt on many occasions. I have never had a straight answer, so I would be grateful if I could have one now. When one aggregates the amount, including public pensions, private finance initiatives, Network Rail and bank bail-outs, one reaches the figure of £2.220 billion, which is 158.8 per cent. of gross domestic product. Is that the case? The figures are from the Office for National Statistics. Will the Chancellor also tell my why, in relation to Royal Bank of Scotland and Lloyds, the £62 billion that he announced before the rise of the House for Christmas, was not disclosed to either the Public Accounts Committee or the ONS? Is it the case that Sir Martin Scholar is taking that matter up with him right now?

Alistair Darling: I think that the hon. Gentleman means Sir Michael Scholar, who is the chairman of the ONS. I have explained that point before to the House. This was money that was made available by the Bank of England as emergency support to ensure that RBS and the then HBOS could get through the crisis that we faced in October 2008. I have been asked about that and explained the position before. As I have told the Chairmen of the two relevant Select Committees, I am reflecting on how we deal with such matters in the future.
	With regard to the other question, the hon. Gentleman is adding together all sorts of things, including future pension liabilities. The correct thing to do is to look at our position in relation to our debt and compare that with other countries. Even though our debt is going up, by 2014 it will still be below the G7 average.

Lembit �pik: While the Chancellor's intention to reduce the public debt significantly through specific targets is unquestionably laudable, my concern is that if he-or someone else, if a different party has taken the reins of Government-misses the target, what is to prevent him from introducing an amendment to the Bill to alter the target? This is a policy statement rather than a binding objective, because it could be changed by statute in the future.

Alistair Darling: I shall come on to that point, but as I was saying before I gave way, all Governments have rules and objectives. Up until 1997, those were simply statements made by the Chancellor in a Budget or at some other fiscal event. Since 1998, we have had the code for fiscal stability and two rules that have guided fiscal policy for the past 10 years. The hon. Gentleman is right: it is open to any Government and Chancellor to say that circumstances have changed and so we need to change policy. I have been a Minister for the past 12 years and I can tell the hon. Gentleman that the discipline created by rules, so the Chancellor can tell Departments that they cannot have any more funds because it would breach a particular rule, is important. I daresay that that was also important for previous Governments. Today we are legislating to put on the statute book a requirement to reduce the deficit by half. Of course, it will not be a question of going to jail if we do not do it, but having to come back to the House to seek further legislation will be a discipline for future Governments. It is not uncommon for Governments in other parts of the world to have similar strictures on them.
	The two rules that the Government operated between 1997 and 2007, before the current financial crisis hit us and hit other countries, were to balance the budget, excluding public investment, over the economic cycle and to keep Government debt at a prudent level. Those two rules were appropriate to the challenges of the time. We wanted to increase public investment, and at the time there was a consensus in this House-certainly in the latter part of the 1990s and the early part of the last decade-that our public services did need more money spent on them, including the health service and schools. Those rules were designed to enable us to do that. Over that 10-year economic cycle, which ended in 2007, we were able to balance the budget and borrow to invest, which is something that previous Governments of both political colours had not been able to do previously. We were able to increase significantly investment in public services, tripling it from 0.6 per cent. of GDP in 1996-97 to 2 per cent. in 2006-07, its highest level since 1979. We also saw a continuous expansion in the economy, while reducing Government debt as a share of GDP, from 42.5 per cent. in 1996-97 to 36 per cent. in 2006-07.
	Those rules stood our economy and the country in good stead during that period, but events towards the end of 2007 and in 2008 fundamentally changed the economic situation for the entire global economy, because we experienced the worst economic conditions seen in more than 60 years. We were operating in a completely different environment, and policy, here and in other countries, needed to adapt to reflect that. No one could have foreseen the sheer scale and spread of the global financial recession that hit economies all over the world in 2007 and at the beginning of 2008. The result is that borrowing and debt have risen in most countries, ours included.

Mark Harper: In his opening remarks, the Chancellor made much of the need not to reduce the deficit too fast. However, his written statement to the House on 2 December reported on ECOFIN-I presume that either he or the Chief Secretary attended and agreed with the recommendations -which called on the UK to reduce its budget deficit below 3 per cent. of GDP, or half the level in this Bill, by the 2014-15 financial year. He suggests that the approach in the Bill is prudent, but in another context he suggests that we go twice as fast. Can he account for that disparity?

Alistair Darling: The hon. Gentleman refers to the Finance Ministers' meeting in Brussels at the beginning of December, which I most certainly attended, and the rules that pertain to countries in general. The Commission can make recommendations, but as we are not in the euro, we are not obliged to follow them. We have no plans to change our current policy on that issue. The measures that I have announced in the pre-Budget report and before are sensible and, at this stage and when there is still so much uncertainty as countries emerge from the global recession, it is sensible to reduce the deficit in a way that does not damage our economy.
	The recession has had a substantial impact on the public finances, here and in every country. With economies weakening, tax revenues have fallen. In this country, we have seen falls in corporation tax, especially from the financial services industry, but also in income tax. Higher unemployment inevitably and rightly means that more has to be spent supporting people and families. There has also been a cost to continuing to maintain and support the economy and stabilising the banking system. However, both sides of the House agree that stabilising the banking system was necessary. It was not an optional extra, because it would have been calamitous not to have done so. But there is a difference in our policies on support for the economy. Had we not maintained spending to support the economy, the pain and cost of the recession would have been far greater. I do not accept the argument of those who claim that we should have started to cut back on expenditure two years ago. That would have been extremely damaging to the economy and would have made it even more difficult for people.
	As we emerge from this global downturn, we need to cut our borrowing, as other countries are doing. To try to meet the fiscal rules put in place for the previous economic cycle would be perverse. Not to allow borrowing and the deficit to rise to help people and businesses would have meant greater pain and more job losses, as we saw in the recessions of the 1980s and 1990s, and would have meant increased costs in both human and economic terms.

Bob Spink: Before the Chancellor moves too far from the banking system, would he agree that in order to build public confidence it might be worth considering linking Ministers' pay to performance? If the Government failed to meet the target, Ministers' pay could be cut.

Andrew Pelling: Or increased.

Alistair Darling: I think that the latter proposition is probably a remote possibility in the current climate, but the hon. Member for Castle Point (Bob Spink) makes an interesting proposition.
	The vital point-one to which I shall return later-is that it is important that Ministers and Governments are accountable to the House, which they are of course. Each and every one of us who are privileged enough to be Ministers of the Crown are answerable to the House, and if we do not come up to the mark, one way or another it is open to the House to do something about it. That remains the case, and it is perhaps a more draconian system than simply modifying that week's pay packet.

Kelvin Hopkins: My right hon. Friend has emphasised the importance of trying at least to moderate, if not reduce, borrowing. However, would not the most sensible course of action be to maximise the tax take by minimising tax avoidance and evasion and ensuring that the tax gap is closed?

Alistair Darling: I agree with my hon. Friend. I, too, want to reduce borrowing. We have to do more than moderate it-it has to come down. He is right also that part of what we must first do is close the tax gap and ensure that HMRC does everything possible to ensure that it collects every penny due to it. That is not always possible-people go bankrupt and so on-but we must do that. It is also necessary for us to be vigilant about closing tax loopholes when they emerge. One of the successes of the G20 meeting last year was at long last to get international agreement to begin to open the doors on some of the tax havens, such as Lichtenstein for example, so that we can get access to the records of people who live and do business in this country but avoid paying tax here. That is grossly unfair and inefficient. I agree with him on that.
	We have a duty to support the economy during the downturn, and that has resulted in higher borrowing, and indeed such measures are still supporting the economy. Not to have put in place the discretionary measures that we have introduced since the end of 2007 would have had disastrous consequences for the economy-I accept that is a minority view, although held by those on one side of the House-because failure to support the economy would have meant higher, not lower, debt and higher, not lower, long-term borrowing.
	I have always made it clear that support for the economy during the downturn goes hand in hand with steps to rebuild our fiscal strength once recovery is established. That is necessary to get the growth that we need. However, it is also imperative that we get our borrowing down in a way that supports growth, because growth itself will help us to reduce our borrowing and debt. The alternative is to consign ourselves to a decade of austerity, low growth and low employment, which I do not think would be the right thing for this country.
	As I said, in the past, there have been many and varied fiscal objectives under successive Governments. Since 1997, however, our fiscal objectives have remained in the medium term, to ensure sound public finances so that spending and taxation impacts fairly between generations, and in the short term, to support monetary policy and to help to smooth the path of the economy. Despite the disruptions of the past couple of years, those objectives remain important, and to get back on that course we need to get borrowing down on a reasonable time scale.
	The Bill requires the Government to set out a fiscal plan for delivering sound public finances, which must be approved by Parliament, and places a duty on the Government to meet that plan. As I said earlier, it gives Parliament a clear role in setting and monitoring the Government's medium-term fiscal plans. Parliament must approve those plans before they become law, so this Bill gives the House a new opportunity to scrutinise the Government's plans. Over the past few months, there has been an understandable desire to reassert the authority, in particular, of the House, and I believe that the Bill is one way in which we can do that. It represents a substantial strengthening of the fiscal policy framework in response to the challenges we face while enabling the House to exercise greater scrutiny, not just through Select Committees, but through the House sitting in this Chamber.

Gregory Barker: Does the Chancellor believe that, had the Bill been in force earlier in his term of office, or during the Prime Minister's term of office as Chancellor, the public finances would be in a less ruinous state and that we would not be the only economy in Europe still in recession?

Alistair Darling: No, I do not accept that. As I said earlier-the hon. Gentleman might not have been here-prior to 2007, when this crisis began, our debt levels came down to the second lowest in the G7. We have been reducing debt while spending more on infrastructure. The hon. Member for Stone (Mr. Cash) mentioned the railways. I know, having been Transport Secretary for four years, what happens when a Government inherit a transport system starved of investment, as it had been in the 1990s-literally, things come off the rails. That is why I make no apology for the fact that the Government spend more on the railways and infrastructure. Our transport system needed the investment.
	We have spent more on schools and hospitals too. We owe a great deal to the Victorians, but I do not think that they expected us to be relying on their hospitals at the back end of the 20th century. We spent that money while reducing borrowing. Now let us consider what happened to us in 2007-08-this has a bearing on the point made by the hon. Member for Bexhill and Battle (Gregory Barker) about the recession. We have a very large financial services sector-I think that we are, in most people's view, the main financial services sector in the world-so the recession has had a far greater effect on us than on others.
	I would like to ensure that we have a major financial centre here in the future. That is why we have to toughen up regulation and work with the industry to ensure that we achieve that. However, the idea that when we entered the downturn, we had not been running the economy efficiently and effectively is nonsense. Yes, we were spending more money on public services, but not a day or week went by when people on the Conservative Benches did not ask for even more money-not less-for schools and hospitals. On some days, they even outdid the Liberal Democrats in calling for more expenditure on services, so for them to say now that they did not want that spending is nonsense.

Philip Davies: The Chancellor appears to be rewriting history as he goes along. He is trying to give the impression to the House that the Government were repaying debt until the economic crisis hit, but that is clearly not true. The Government were borrowing money each year in many years before the crisis hit. Is it not a fact that, unlike the impression that he is trying to give, my hon. Friend the Member for Tatton (Mr. Osborne) is right that the Chancellor was not fixing roof when the sun was shining?

Alistair Darling: When the hon. Gentleman has a chance to think about these things, he might realise that Governments borrow money. There was a time, early in the last decade, when Government borrowing was going down, but then we started to hear concerns from the pensions industry that the Government were not borrowing enough-the pensions industry actually requires borrowing.

David Gauke: So it's their fault now?

Alistair Darling: The hon. Gentleman makes an extremely flippant remark.
	From time to time, Governments need to borrow money to ensure, for example, that we have infrastructure, schools and hospitals. At times like these, were a Government to shut down spending and so put even more people out of work, or were they to get into the absurd situation, like the Government in the early 1930s, of trying to cut benefits and spending, they would make a difficult situation even worse. So I do not accept the point made by the hon. Member for Shipley (Philip Davies).

John Pugh: Will the Chancellor give way?

Alistair Darling: No, I want to make some progress. Perhaps I will give way later.
	Clause 1 of the Bill imposes three duties on the Treasury: first, to ensure that Government borrowing as a share of GDP falls in every year to 2015-16; secondly, to ensure that Government borrowing is at least halved as a share of GDP over a four-year period to 2013-14; and thirdly to ensure that Government debt as a share of GDP is falling by 2015-16. The latest forecasts for the public finances, which I set out at the pre-Budget report last month, are consistent with these duties: in the next financial year, 2010-11, Government borrowing will start to fall and continue to do so each and every year after that; borrowing will reach 5.5 per cent of GDP by 2013-14, so that we will more than halve the 12.6 per cent. of GDP reached this year; and with further consolidation thereafter, debt as a share of GDP is projected to fall in 2015-16. I have announced measures that will allow us to more than halve the deficit as a share of GDP over four years-from 12.6 to 5.5 per cent. That is the sharpest reduction in the budget deficit for any G7 country.
	In relation to the points raised by some hon. Members earlier, there are no powers to amend those duties. They can be changed only through new primary legislation. In other words, the Government would have to return to the House were they not meeting the obligations.

Andrew Pelling: Can the Chancellor give a judgment on just how deflationary those changes in public spending could be? Is there not a danger from the straitjacket that is being introduced through this legislation?

Alistair Darling: I believe that the changes are manageable, and they are the right thing to do. The hon. Gentleman might want to make his point to those on the Conservative Front Bench, who as I understand it want to go further and faster. There is a risk of damaging the economy if that happens. Inevitably, these are matters of judgment, but I am very happy to justify why we have had to borrow so much at the present time. However, if we are going to get sustainable growth in future, it is important that we get that borrowing down. To halve it over a four-year period is a reasonable thing to do and a reasonable rate at which to do it. To go further than that-and to make that judgment at the present time, when there is so much uncertainty-would be hugely damaging to the economy and would present a terrible risk, especially when the Opposition are contemplating spending even more money on top of that.

John Pugh: Following on from a previous question about what would happen if the legislation had been in place earlier, if it had been in place, would the Chancellor have been free, as he was free, to bail out the banks as promptly as he did? Is he not hampering the range of movement of a subsequent Chancellor?

Alistair Darling: No, because the Chancellor would quite obviously have to come back to the House if circumstances were as severe as those that pertained a couple of years ago. I do not think that anybody would argue for getting ourselves into a position through legislation where the Government were completely hamstrung and could not effectively govern the country. That would be nonsense. However, it is important that there should be a discipline and a clear sense of direction on reducing the deficit.
	Clause 2 sets out a duty that the Government must continue to have a fiscal plan after 2016. That will be done by order, so the Government can decide what is appropriate. Again, the matter has to come back to the House. There is also a provision in clause 2 to give the Treasury the power to add further duties to the Government's fiscal plan. We have illustrated how we do that. For example, a draft order was published on the day of the pre-Budget report requiring the Government to ensure that borrowing as a share of GDP came down to 5.5 per cent., which is more than halving the deficit. As we look to the future, if we can get growth that is more robust than in my forecast, borrowing will naturally fall faster. It would then be possible to reduce that borrowing further in the medium term. However, at this stage, I believe that the course that I have set out is the right one.
	Clause 3 sets out various reporting requirements, so that the House has an opportunity to see what progress is being made. The Treasury must report on whether it has succeeded in fulfilling the duty that is imposed upon it-that is, on whether borrowing as a share of GDP is lower-and also ensure that debt is falling. If the targets are not met, the Treasury has to explain to Parliament why that is not the case. Again, that is subject to scrutiny by Parliament. There will be a revised code for fiscal stability, which I shall make available before Committee, so that there can proper scrutiny of it.
	Clause 4 makes it clear that it is to Parliament that the Government are accountable for approval of, progress towards and compliance with their fiscal plans. I see that the reasoned amendment calls for the creation of a new independent body to monitor and demand fiscal action, but I believe that Parliament should hold the Government to account for their fiscal policy, not a quango, an external body or, indeed, the courts. The Government are accountable to Parliament and, through Parliament, to the people.

George Osborne: rose-

Alistair Darling: I very much hope that the hon. Gentleman and I both agree that the Government are accountable to Parliament and, through Parliament, to the people.

George Osborne: When the Prime Minister was shadow Chancellor and originally set out his plans for fiscal rules, he said that they should be monitored independently by an independent office. Does the Chancellor know when the Prime Minister changed his mind?

Alistair Darling: My recollection was that when the then shadow Chancellor set out his plans, he set out proposals that we subsequently enacted. The hon. Gentleman asked about independent verification. Again, my recollection is that we said that we thought that there should be a role for the National Audit Office, and there was indeed a role for the NAO, which is independent of the Government.

Stewart Hosie: I agree entirely with the Chancellor that Parliament should hold the Government to account, on this and many other matters. So why have we not had a comprehensive spending review, so that we can understand precisely what the impact of the cuts will be and hold the Government to account on the plans that they are already putting forward?

Alistair Darling: For the reason stated in the pre-Budget report. I said that there was still a lot of uncertainty about. We still do not know what unemployment will be this coming year. We had some good news just after the PBR, in that employment rose and unemployment fell, but we still think that unemployment will rise during the course of this year, so there is a lot of uncertainty about, and we still have the current spending plans, which run through until April 2011. That is why we have not done a spending review just now, and that remains the case.
	There is no doubt that we face a huge challenge as a country. There will be difficult judgments over the next few years. I have said before that some tough decisions will have to be taken, but the real judgment is this: we should recognise that what the Government do and what they spend can make a difference to the future rate of growth, and they can certainly make a difference to the quality and availability of public services, upon which many people who send us here rely. However, what the Government do and what they spend will also set the direction of this country for the next 10 or 20 years. That is why it is important that we get it right. I believe that my judgment of bringing borrowing down in a way that is manageable and deliverable and, at the same time, does not damage the social and economic fabric of this country is the right one. This Bill will help us to achieve that. I commend it to the House.

George Osborne: I beg to move an amendment, to leave out from That to the end of the Question and add:
	this House declines to give a Second Reading to the Fiscal Responsibility Bill because it does not establish an independent mechanism for ensuring the publication of credible fiscal forecasts and assessing the effectiveness of Government fiscal policies in achieving stated fiscal objectives; because the duties imposed by the Bill are not accompanied by any corresponding sanctions; because in the absence of spending plans which set out a credible means by which public sector net borrowing is to be reduced, legislating to secure sound public finances is irrelevant and a distraction; and, consequently, considers that the Bill is inadequate in achieving the objective of securing sound public finances.
	Although this piece of legislation consists of only six short clauses, it must be the biggest load of nonsense that this Government have had the audacity to present to Parliament in this Session. Quite frankly, I do not think the Bill is the idea of the Chancellor of the Exchequer or any of his Treasury Ministers, or indeed of any official in the Treasury. It was dreamt up by the Schools Secretary and the Prime Minister when they were trying to think of something to say on the Andrew Marr Show on the eve of the Labour conference, so now we all have to go through the rigmarole of debating it in Parliament. The Bill was a completely feeble stunt, a fact that is revealed when we look at the clauses.
	Let us remember what one of the economists whom the Prime Minister himself appointed to the Monetary Policy Committee has said about the Bill. Willem Buiter has said:
	Fiscal responsibility acts are instruments of the fiscally irresponsible to con the public.
	That was the man whose economic judgment the Prime Minister trusted so much that he put him on the Monetary Policy Committee of the Bank of England, but no one is conned. If the Bill was supposed to reassure the markets, it has failed. This is what one of the City's leading economists, Michael Saunders of Citibank, says:
	the government's plans for legislation to cut the deficit are not convincing and are probably just camouflage-a sort of 'fiscal figleaf'-for the lack of genuine action.
	If the Bill was supposed to con the business community, it has completely failed in that task too. Richard Lambert, the head of the CBI, was on the radio just two or three days ago saying:
	I'm certainly not satisfied with the government's plans. It's going to be publishing in the next few days legislation which says it is going to halve the deficit within the next four years, but it's a bit like me saying I'm going to join the gym and that means I'm fit already.
	The Bill was also supposed to convince the independent economic commentators, but this is what the Institute for Fiscal Studies says about the legislation that the Chancellor has brought to the House today:
	it is far from clear why investors and voters should be any more impressed by this-
	the Bill-
	than they were by the Code for Fiscal Stability, which was enshrined in statute with much fanfare in 1998.
	The Bill has failed to con even the Labour party. This is what the right hon. Member for Norwich, South (Mr. Clarke) says- [ Interruption. ] The Chief Secretary to the Treasury laughs, but I seem to remember that the right hon. Gentleman is the former Home Secretary-not the former Home Secretary who says that the Labour party has a big charisma problem; I am talking about the other former Home Secretary, who says that this piece of legislation is vacuous and irrelevant. As with so much that the right hon. Gentleman says about the leadership of the Labour party at the moment, he is absolutely right, because when we go through the Bill clause by clause, we see what complete nonsense it is.
	Let us start with clause 1, which deals with the duties on the Treasury. Here we read:
	The Treasury must ensure that...public sector net borrowing expressed as a percentage of gross domestic product is less than it was for the preceding...year.
	We are also told that the law will require net debt to be falling by the end of five years. Saying these things, and putting them into statute, will not actually make them happen, however. Every Budget and pre-Budget report produced by this Chancellor and his predecessor since 2003 has promised falling net debt at the end of a five-year horizon, and every one of those borrowing forecasts has been wrong, in times of boom and of bust.
	The present Chancellor has got his total borrowing forecasts wrong to the tune of £560 billion since he entered No. 11. It is now four times higher than when he announced his forecasts for the PBR in 2007, after the credit crunch had begun. So why would anyone believe his latest forecast, just because he writes it into the clause of a Bill instead of publishing it in the Budget Red Book? Does the fact that it is printed on green paper, given a solemn title and passed through Parliament after being looked at by a Committee of the House make it any more likely to happen, or any more real, than when he stood at the Dispatch Box on Budget day and told us that these things were going to happen?
	Clause 2 relates to Further duties for securing sound public finances. In it, we find a stunning extension of state power. We discover that
	The Treasury may make an order imposing...a duty or duties
	and that these duties are
	imposed for the purpose of securing sound public finances.
	We also find that these duties
	must be consistent with the key principles as applied by the code for fiscal stability.
	This is the same code for fiscal stability, by the way, that allowed the Prime Minister to run massive deficits in the middle of a boom, but never mind that. We shall have an order that will impose a duty to secure sound public finances, and it will have to be laid before Parliament and approved by resolution of the House of Commons.
	Who is to be on the receiving end of this great order that will descend from on high, from Her Majesty's Treasury, to use the full authority of Parliament to impose a duty to secure sound public finances? Which public body will be quivering in fear, wondering whether it is to be the Treasury's chosen victim? Well, it turns out that that public body is the Treasury itself. Under clause 2, the Treasury will have the power to make an order that imposes a duty on the Treasury. That will make it sit up and take notice, will it not?

William Cash: On the question of duties, does my hon. Friend agree that the point he is making could equally be applied to the Government Departments on which Parliament has imposed a series of duties that drive levels of public expenditure ever upwards? Does he not agree that, to get the whole question of public expenditure right, we would have to amend or repeal many of the duties imposed on public bodies in order to reduce the overall level of public expenditure?

George Osborne: I take the point that my hon. Friend is making.
	The Chancellor said in his speech that the great sanction would be that, if the existing code or Act were broken, the Chancellor would face the humiliation and embarrassment of coming to Parliament to introduce a new piece of legislation. I guess that he is in a position to know what that feels like. From what I can see of his behaviour today, however, that is not a huge sanction.

Lorely Burt: Does the hon. Gentleman agree that legislation without sanctions is not worth the paper it is written on?

George Osborne: I agree with my-I was about to say my hon. Friend, but that would be to get ahead of ourselves, would it not? We are all being very nice to the Liberal Democrats these days. I agree with the hon. Lady. I take it from what she said that she will be joining us in the Division Lobby tonight; I certainly hope she will.
	Hon. Members might be hoping to find something a bit more impressive in clause 3, but in it we discover that the Treasury will be required to tell us whether it has met its borrowing forecasts. The last time I checked, I found that that happens in every single Budget statement and pre-Budget report. However, we now need legislation to turn what has been the standard practice of Chancellors, at least since the second world war, into the law of the land. And when will the Treasury be required by law to tell us whether it has succeeded in performing its duty to secure sound public finances? According to clause 3(5), this will have to happen
	during the financial year ending with 31 March 2016.
	We shall not have long to wait, then, for the Government's assessment of how well they are doing. They cannot get their borrowing forecasts right from one month to another, yet they now expect us to believe a commitment written in statute relating to 2016. They are living in a completely parallel universe.
	Let us look at clause 4, which relates to accountability. Let us see what terrible fate will await the Treasury if it fails to comply with the order imposed on it by the Treasury. Will the Chancellor be hauled off to the Tower? Will he be forced to hand in the great seals of his office? Will his pay be docked for poor performance? Will he at least have to apologise? No. Clause 4 states that the fact that any duty imposed as a result of the Bill
	has not been, or will or may not be, complied with does not affect the lawfulness of anything done, or omitted to be done, by any person.
	This is an absolutely ridiculous clause. There are no penalties. This must be the first law introduced in Parliament that contains absolutely no legal sanction whatever for those who break it.
	We have only two more clauses to consider. Clause 5 is about interpretation, and states that the Treasury will be required to explain the meaning of such terms as public sector net borrowing and public sector net debt. It is a shame that the meaning of those terms was not explained to the previous Chancellor when he was in office. As far as I can see, the clause does not require a proper explanation of the state of the national accounts that takes into account the private finance initiative liabilities that are kept off-balance sheet, and public sector pension liabilities.
	Finally, clause 6 deals with the short title of the Bill, and tells us that the legislation will be known as the Fiscal Responsibility Act 2010. We will have to see whether it ever becomes an Act. This clause confirms a time-honoured principle in this place: the greater the claims that are made by a Bill's title, the less substance it usually contains.
	Of course we have to debate this vacuous and irrelevant legislation, but why did the Chancellor feel the compelling need to introduce it? Why is he the first Chancellor in history to feel that he needs an Act of Parliament on top of a Budget statement? There can be only two explanations: either he does not trust himself to secure sound public finances, or he knows that the public do not trust him to secure them. Neither is exactly a ringing endorsement; both are a reflection of the catastrophic, disastrous state to which this Government have reduced the finances of this country.
	I have searched far and wide to find another country that has introduced a fiscal responsibility Act, and I have found one. It is that shining example of fiscal rectitude, Nigeria. That is where the Chancellor appears to have got his inspiration from. It was no doubt sent to him in one of those e-mails that we all get from Nigeria. Perhaps it said, Dear honoured sir, I am a former finance Minister of this country, and I have a plan to reduce your debts. Please send me your bank account details and I will forward the money by return.  [ Laughter. ] Of course this would be funny, if this were not such a fundamentally dishonest piece of legislation, and if this were not such a fundamentally serious time, in which the credibility of our nation and its ability to pay its way in the world are being questioned by markets, investors and credit rating agencies around the world.
	A poll in yesterday's  Financial Times found that a fiscal crisis was the biggest single risk facing the British economy at the moment. The managing director of Moody's Global Sovereign Risk group is now warning of the danger of
	an abrupt increase in long term interest rates
	in the UK. The former Deputy Governor of the Bank of England, Sir Howard Davies, whom the Prime Minister appointed to be the first head of the FSA, said this week that
	the major risk to the British economy
	is the loss of confidence in the government's ability to get the public finances back under control.
	And today we hear that the world's biggest bond investor, PIMCO, has announced that it will be selling off UK Government bonds this year. It says that this is a significant policy statement prompted by concerns about rising borrowing levels in this country. It has just issued a statement saying that the question is when, not if, Britain's credit rating will be downgraded.

John Redwood: Has my hon. Friend noticed that during the period in which the Bank of England has been buying a quarter of the total Government debt in issue to try to keep the price up, the price has been falling so the long-term rate of interest has been rising? That has happened even though the Bank is buying a quarter of the issue, so what is going to happen when it stops buying?

George Osborne: My right hon. Friend makes an extremely telling point, and I am going to come on exactly to the threat to interest rates posed by the Government's policy. Before I move on from Pimco, I cannot help noticing that the head of the European arm of PIMCO, one Mr. Andrew Balls, is the brother of the Schools Secretary. Clearly, the Balls family's confidence in the Chancellor's ability to do his job runs across the brothers.
	My right hon. Friend the Member for Wokingham (Mr. Redwood) makes a very important point about gilts and the fact that we are now in a period when the Bank of England is pursuing a policy of quantitative easing, but with £200 billion of gilts to get away next year, we need buyers, not sellers of those gilts. Here, however, we have the world's largest bond investor saying that it is going to be selling gilts next year. Of course gilt yields are rising-up 1 per cent. last year and up 0.5 per cent. in the last month, which is twice the rate of increase in countries like Germany.
	Rising gilt yields, of course, mean in the end rising interest rates, so a central objective of policy for recovery must be to allow the Bank of England to keep interest rates as low as possible for as long as possible, which requires a credible fiscal plan. The absence of such a plan from the Labour Government is pushing up the yields that will push up the interest rates and the mortgage rates, causing businesses to fail and jobs to be lost. The Chancellor, however, remains paralysed by inaction. He seems to see the storm clouds gathering, but he is doing nothing. We know the reason why. The Prime Minister and Schools Secretary-the man whom the Prime Minister wanted to be the Chancellor-will not let him. The disagreements between them are now an open secret. They are on the front page of  The Financial Times and are being read across Europe. The Chancellor is at least vaguely aware, I think, of the seriousness of the debt crisis this country faces, but the Prime Minister is in complete denial. The Chancellor at least uses the word cuts, but the Prime Minister could not bring himself to use that word in the first big interview he gave in the new year.
	I believe that the Chancellor wanted to accelerate the reduction in the deficit and he wanted to do so in the pre-Budget report, but he was overruled by the Prime Minister who accelerated the spending instead. That is the problem-the Chancellor keeps losing this argument in Downing street and the result is that Britain's credibility in the world markets is further undermined. Britain's credit rating is for the first time in our history at serious risk and British interest rates are set to rise in a recovery.
	The answer surely is to deal more decisively with the deficit. As the Chancellor well knows, that is the view of British business and the CBI. The Labour party used to parade the CBI as one of its great supporters, and I believe that in 1997 the CBI was invited into Downing street before the trade unions were. Now the Labour party dismisses the views of the organisation that speaks for many British businesses, but this is what Richard Lambert, the man who was also appointed to the Monetary Policy Committee by the Prime Minister, says:
	History tell us that these are really difficult nettles to grasp but if you grasp them in a clear and bold way, then the pain lasts for a shorter period than if you just limply grab and hold of them... Our strong instincts are that the risks of going too soon are less than the risks of waiting too long... Two full parliaments of chancellors being responsible just seems too much to expect.
	Here is the view of the OECD expressed in the last few days:
	Major fiscal consolidation is needed
	in the UK
	and more concrete plans should be developed and communicated as early as possible.
	That is the OECD's view expressed after the pre-Budget report.
	Here, now, is the view of the international markets. BNP Paribas says:
	The UK's public finances are in such a poor state that delay could lead to a loss of confidence, a downgrade of the UK credit rating and a crisis in the public finances.
	Sir John Gieve, another former deputy governor of the Bank of England appointed by the Prime Minister, stated that the Government's plan
	will be hard to sustain politically and eliminating the structural deficit more quickly in 2011 and 2012 looks a better course.

Alistair Darling: I have said that we should halve the deficit over a four-year period, but the hon. Gentleman clearly thinks that we should go further and faster. How much faster and how much further?

George Osborne: I am just coming on to my view, which is exactly the same as that of the Governor of the Bank of England, the person who is in charge of monetary policy. The Chancellor is in charge of fiscal policy in this country; the Governor of the Bank of England is in charge of monetary policy. It is the view of the Governor that we should eliminate a large part of the structural deficit in the next Parliament and that is precisely my view as well.

Alistair Darling: That is what we are proposing to do, but in addition, the Governor of the Bank of England said in the same interview in response to a series of questions that he recognised the difficulties that could arise from going too fast and too much further. Let me ask the shadow Chancellor again: if he thinks we should go further and faster, will he tell the House how much further and how much faster? Especially in the light of what has happened in the last 24 hours, some further detail would be very welcome.

George Osborne: The Chancellor says that he has the same view as the Governor of the Bank of England-he has just said that-but when asked by the Treasury Committee what he thought about the risk of a credit downgrade to the UK, the Governor said that we needed a credible plan, which by implication does not currently exist, and that such a plan should consist of the elimination of a large part of the structural deficit in the next Parliament. That is a view I share with the Governor of the Bank of England and it is clearly not the view that the same Governor believes is being pursued currently-or else he would not have referred to the need for a credible plan.

Alistair Darling: Let me ask the hon. Gentleman a last time, as it does not seem that I am going to get an answer. If he read the whole of the Governor's reply, the hon. Gentleman would know that he was talking about countries across the world, not just this country. But why will the hon. Gentleman not answer the question? He quite clearly hints that he would like to go further and faster, so why will he not tell us exactly how much? Does he want to reduce the deficit a year earlier than we do? If so, how does he intend to do it? If he does do that, it might mean taking another £26 billion or so out of the economy. Is that his intention?

George Osborne: This is what the Governor of the Bank of England said when asked- [Interruption.] I know that it comes as a complete surprise to Labour Members that the Conservative party agrees with the Governor of the Bank of England and the Chancellor of the day does not seem to agree with him. When asked to comment on the plan that the Chancellor had set out, the Governor said this, and I have it before me:
	I think
	the plan
	has to be something where a really significant reduction in the deficit, the elimination of a large part of the structural deficit, takes place over the lifetime of a parliament, which is the period for which a government is elected. Beyond that-
	commenting on the Chancellor's plan-
	is a statement of intent and hope rather than a plan for which someone can be held accountable.
	That is what he said in evidence to the Treasury Committee on 24 November 2009. I agree with the Governor of the Bank of England and that is our policy.
	It is increasingly clear, by the way, that virtually every independent and respected opinion in this country agrees with us rather than with the Government of the day. Such opinion is also in agreement with our approach towards creating a fiscal framework in which we can be held accountable. What we are going to do if we are elected to power in the next few months is create a proper and independent office for budget responsibility. Indeed, we publish today draft legislation- [Interruption.] Well, I am not sure what Liberal Democrat policy is on independent fiscal accountability-although, of course, I must be careful.
	Let me explain the very significant difference between what we are proposing and will implement and what the Government are presenting to Parliament today. The first striking difference is that while this Bill leaves the Treasury in charge of forecasts and gives the Chancellor the room to fix the forecasts in order to fit the Budget policy-as we know, a practice that has developed in recent years-our Bill would for the first time ever put the forecasts of the nation's finances in independent hands. In other words, it would not be the Chancellor of the Exchequer of the day who published the borrowing and debt forecasts; it would be an independent office for budget responsibility, properly resourced and accountable to Parliament.
	Secondly, while this Bill leaves the Chancellor as judge and jury on whether he is sticking to his fiscal strategy, our Bill would subject the Chancellor to the independent verdict of an independent panel of experts in the office for budget responsibility. While this Bill tells us nothing about the true state of the nation's finances, our Bill would give the country a statutory independent audit of the true cost of public sector pension liabilities and the dodgy off-sheet accounting of PFI contracts, and give us a proper national audit of the nation's finances.

Andrew Pelling: Might not the arrangement be strengthened further if the body sat in Parliament, mimicking the Congressional Budget Office in some respects? I know the Opposition feel strongly that it is important to enhance the effectiveness of Parliament, and I may have misunderstood what the hon. Gentleman is proposing. Perhaps he intends the body to sit in Parliament.

George Osborne: It would be rather like the Monetary Policy Committee. It would be independent, but accountable to Parliament. Its members would, I assume, appear before the Treasury Committee, and it would be asked to make a technical judgment in publishing the nation's borrowing and debt forecasts.
	Instead of the Chancellor of the Exchequer, on Budget day or pre-Budget report day, standing up and saying We predict that the country will borrow X, Y and Z over the coming years, this independent body, accountable to Parliament, would make the judgment. It is a technical judgment, and we do not need an elected politician to make it. We need elected politicians to be informed by a proper, independent judgment of the nation's finances; then we shall all be able to make the decisions on tax and spending for which we are held democratically accountable. It is clear from what has happened over the last few years how misled Parliament has been by the borrowing forecasts announced by the present Chancellor and his predecessor, which have turned out to be completely wrong and have led to decisions that were not in the interests of the country.

Geoffrey Robinson: The shadow Chancellor is rightly puzzled about the issue of sanctions that the Treasury might be able to impose on itself, but can he explain what sanctions the new independent body would be empowered to impose on the Treasury if the targets set by the body were not met?

George Osborne: At or around the time of the Budget, and the pre-Budget report, the body will publish not just the forecasts but its view on whether the Government are on course to fulfil the mandate set by the Chancellor-in other words, the elimination of a large part of the structural deficit over the Parliament-and an independent report. Obviously, if the Government were shown to be off course, that would be hugely embarrassing for the Chancellor of the day.
	I do not think that a Chancellor who regularly disagreed with the independent body could survive for long, so it would pose a challenge to him. This would constitute a proper, serious sanction. In extremis, the Chancellor of the day can overrule the Monetary Policy Committee or the independence of the Bank of England, although of course the question never arises. In this case, the Chancellor of the Exchequer would face a very difficult time if, after he or she had said, We will achieve this fiscal result over the coming years, the independent body, at the time of the Budget, said, Actually, they will not.

Frank Field: Is not the truth that the sanction contained in both the Bill and the hon. Gentleman's proposal is the bond market? If a Chancellor of the Exchequer came to the House and said that he wanted to change, in primary legislation, the arrangement that we are discussing today, or if a future Conservative Chancellor said that he was ignoring what the new body was saying about the danger to the economy, we would very soon find our credit ratings lost or further downgraded, and long-term interest rates would rise. That suggests that the real discipline now is not in the House or even in the banking community. We are now subject to the requirements of credit agencies and the bond market for us to start behaving properly.

George Osborne: The right hon. Gentleman has made a very good observation, which is, in fact, true of government through the ages. Even in mediaeval times, kings and Parliament in its then form were subject to the ability to raise money on what were then the international money markets.
	Something interesting has happened in this country's politics. We used to regard Budget day, and pre-Budget report day, as the moment when the Chancellor, whoever it was, would come from on high and hand out the goodies. We were all supposed to be incredibly grateful, and then the Chancellor would disappear for another six months. Of course, things are very different now. The House of Commons is subject to the economic pressures imposed on it by, in part, the bond market.
	I recently read an interview with the Swedish Prime Minister of the 1990s, Göran Persson, who said that no Prime Minister wanted to find himself in the situation in which he had found himself. He was spending more time in the City of London giving presentations to young bond market traders than talking to the Swedish people about the fiscal problems the country faced. The House should take very seriously the fact that the world's largest bond investor said today that next year it would sell gilts rather than buy them, the fact that all the credit ratings agencies have put the United Kingdom on a warning and will decide later in the year whether it should face a credit downgrade, and the fact that our gilt yields are rising at twice the rate of Germany's. Even if the Prime Minister is in complete denial about the economic situation and the fiscal problems that the country faces, I do not think that that is an excuse for the rest of us to ignore those problems.
	I agree with the right hon. Member for Birkenhead (Mr. Field) about the discipline of the bond market, but I believe that an independent office for budget responsibility would help Members of Parliament to hold Chancellors and Prime Ministers to account for their promises, and would give Members proper information on Budget day so that they could challenge what the Chancellor and the Prime Minister of the day were saying. It would also discipline the Government internally, and would help Chancellors to achieve their and the Government's stated goals.
	Our proposal has been welcomed by many different people, including independent economists. The Institute for Fiscal Studies has said that a new independent body of the kind that the Conservatives propose
	could help keep the interest rates at which the government is able to borrow low,
	because it would enhance the confidence of the bond markets in the Government's ability to deliver on their objectives. It has been supported by the CBI and many other organisations. That is why we have published our legislation in draft today. It means proper accountability, a real set of national accounts, lower interest rates, economic stability, and the restoration of Britain's credibility in the world markets. That is what a Conservative Government will bring to this country as we consign this Government and this nonsense of a Bill to the dustbin of history.

Frank Field: I want to explain briefly why I will not be supporting the Government tonight.

Eric Martlew: There is nothing new about that.

Frank Field: That is true, and it is a sadness for me, but clearly not a big enough sadness to the hon. Gentleman, who is now leaving the Chamber.
	Given the Chancellor's ability to present such thin gruel to the House, I am surprised that his party did not claim to see the signs of joined-up government. Yesterday they announced that in future all five-year-olds in our schools would be taught the dangers of debt, how not to fall into debt, what to do if they fell into debt, and how to get out of debt as quickly as possible. Bright, or perhaps not so bright, five-year-olds might suggest that the lessons could start here rather than in the classrooms.
	I want, however, to inject a note of seriousness, if not horror, into the debate. I want to compare our present position with the phoney war that led up to world war two. Although those on all three Front Benches now talk of the need to lower the deficit, they are all also talking about spending more. I do not believe that our voters-the voters of this country-have any idea how serious the financial position of the country is, or how massive the cuts will have to be if we are to return some semblance of order to our national accounts.
	Let me illustrate that first by looking at the payments on the new debt. Let us suppose that we could not roll that debt over, but had to close Government Departments. The cost of the debt in the first year of bailing us out-I am ignoring past debt, which we have to service as well-would be the loss of the Department for Culture, Media and Sport, the Department for Environment, Food and Rural Affairs, the Department for business and enterprise, the Law Officers' Department and the Northern Ireland Office. In the second year-we are not concerned only with the new tranche of debt; there would be two years of debt-we would have to lose, in its entirety, the Department responsible for innovation, the universities and skills. In the third year, the debt repayments would be greater than the budgets for defence, the Cabinet Office and some other Departments of State. It would decimate what we do as a Government if we had to pay for the money that we intend to borrow by closing Government Departments and the programmes that go with them. I do not believe that the people of this country yet have any idea about the seriousness of the position that we face.

Justine Greening: Does the right hon. Gentleman agree that part of the problem is that the Government also seem to have no idea about the seriousness of the situation?

Frank Field: I am critical of all the Front Benchers. In the past few days, the official Opposition have been talking about spending new money. It is bizarre beyond belief to think that the health budget can be ring-fenced. It is one of our biggest budgets, and commitments have been given from Government and Opposition Front Benchers about the sanctity of such budgets. It will be impossible for us to balance the books even at the rate that the Chancellor is talking about-I shall discuss in a moment whether that level would be adequate or quick enough-if we decide that some of the largest departmental expenditures will somehow be saved from cuts.

William Cash: The right hon. Gentleman is talking a great deal of sense. Does he agree with my earlier point that the approach of addressing these issues without having regard to the duties that are imposed on local authorities by Parliament is part of the problem? We have to deal with the question of whether legal liabilities are being raised to a level that cannot be supported by public administration.

Frank Field: I accept that, but we face something far more immediate than that, as I tried to make plain in my intervention on the shadow Chancellor. We keep hearing contributions in this place that sound as though we are now in charge of our affairs and our future, but we are mere pawns on the chessboard of the credit agencies and the bond market. It is to their tune, sadly, that we now have to dance. My worry is that even in the next few months we are going to have difficulty in floating the amount of debt required to see us up to and through the election, let alone the next umpteen years.

Kelvin Hopkins: I usually agree with much of what my right hon. Friend says, but I am alarmed by what he says about the level of cuts that he believes we face. He is talking only about the expenditure side, and not the income side, of the problem, but we should be looking at income and not expenditure. If we cut spending now, we will just make the problem worse.

Frank Field: In my view, if we do not cut enough and soon enough, we will not have a currency. The debate about whether we should have taxation or cuts is to some extent academic. The plea about tax evasion and avoidance that my hon. Friend has made ever since he has been in the House-ever since I have enjoyed listening to him-is one that I was pleased to hear the Chancellor pick up in such a positive way, but that alone is not enough.
	I return to the central issue of whether we are going to see ourselves through to the general election. We have been living in a cloud cuckoo land partly because all the political parties have been saying that they are going to spend more, so that nobody would think that things will be all that tough. The economic crisis was said to be the most serious since the 1930s, but when improvements in programmes are announced, people think, Well, it can't be all that bad, can it? What has added to that illusion is the fact that the Government have been printing money, between 98 and 99 per cent. of which has been buying the Government debt. What we do not know is what the markets will do when there is no more funny money to use to buy that debt. We know that there is £25 billion more; presumably, that money is being spent now and will, one hopes, take us up to February-but then things will hit the fan. Of course, the Government are taking proper actions such as saying to the banks, which behaved so irresponsibly in that earlier period, that they need to restructure their liabilities and assets so that they have a more stable basis from which to carry out their trade. Surprise, surprise, one of the assets that the Government say that the banks should have more of are Government gilts. The danger is that if the international markets do not believe us, those gilts might not be much better than the American mortgage bonds that were floated a few years ago and that got us directly into this mess.
	I want to make a plea to the Government. The point of maximum danger will certainly come when we cannot, or are not going to, print any more money to buy our own debt. Earlier, I made a comparison between the current situation and the phoney war-the lead-up to the war. The comparisons are chilling. In 1938, people came to the House and to the Dispatch Box and told us that there was no real threat from the international situation and certainly not from Germany. Recently, there has been an unwillingness across the whole House to get to grips with the size and extent of the debt. That unwillingness has been equivalent to the denials about the dangers of Nazi Germany. Back then, when the Government started to lose support, they were forced to give a pledge to Poland. An equivalent pledge today is the Bill before us, which the Government would not have introduced willingly, but they know that they need to introduce it if they are to increase the confidence of the markets. In 1939, the then Prime Minister said to Montgomery when visiting the British Expeditionary Force, I don't think the Germans have any intention of attacking us. Do you? Montgomery soon put him straight on that. The bizarre denial of that time culminated in the Norway situation, when we all learned just how grave and perilous the position of this country was.
	I want to end by making a plea to the Government. The Conservative party did not have a terribly good record on Munich, so I am not trying to make party political points here; it is far more serious than that. It is a big regret of mine that in the lead-up to the Iraq war-and I am probably the only person in Christendom who still believes that the Iraqis did have weapons of mass destruction-I did not ask the then Prime Minister an obvious question about the plan for day two. I did not ask about the plan for ensuring that the country did not descend into chaos after the Government had been toppled. I therefore make a plea to the Chancellor, knowing that no one will be able to stand up and say that they have taken the relevant precautions. What defences have the Government thought through if long-term interest rates do not rise in the way that the shadow Chancellor has described, but start to gather pace? What will our response be? What will be our defence to prevent further deterioration if we lose our credit rating? What do the Government have in the cupboard to ensure that we do not face a gilt strike when the Debt Management Office at the Treasury reports to the Prime Minister that it has not been able to garner enough funds that week to buy up the Government debt? Margery Allingham wrote a brilliant diary on the horrendous drift into war from 1938 to 1939. When the Norway disaster engulfed the country, she wrote of the then Prime Minister, Chamberlain, that he was a vain old man with nothing up his sleeve. Please, God, I hope that this Government have a lot up their sleeve.

Jeremy Browne: Thank you, Mr. Deputy Speaker, for giving me an opportunity to contribute to this pressing and important debate. As we have just been hearing from the right hon. Member for Birkenhead (Mr. Field), we gather at a time of great economic risk for our country. The first signs of tentative economic growth may be appearing, but we are far from out of the woods.
	The economic backdrop to the Bill is dire, as the right hon. Gentleman has just said. In 2009, the British economy contracted by almost 5 per cent. That is worse than in either of the Conservative recessions of the early 1980s and 1990s, and worse even than 1978 and the winter of discontent. Remarkably, it is even worse than the year of the Wall street crash or any of the subsequent years during the great depression.
	Our economy contracted by more in 2009 than in any peacetime year since 1921, and the impact on our public finances has been truly devastating. One quarter of British public spending is now unfunded. We have a low-tax economy, not because ordinary people and households around the country pay less tax but because of a collapse in corporation tax. At the same time, however, we have a high-spending Government. The money coming into the Treasury's coffers is comparable to that in an American-style society, but the money going out of those coffers is more comparable to that in a Scandinavian-style society. The long-standing ready-reckoner suggesting that any country borrowing more than 10 per cent. of gross domestic product in a given year has entered basket-case territory has been breached. In this financial year, we in Britain will borrow more than 12 per cent. of our GDP, and the proportion will be well over 10 per cent. again next year.
	What will be the effect on public services-the local schools, the police, the hospitals-in our individual consistencies? One quarter of those services are unfunded, and we are plugging that gap this year with public borrowing. As a country, we are borrowing an extra £500 million every single day, which equates to more than £20 million extra every hour or £1 million extra every three minutes. We have borrowed about £25 million extra since this debate started. Our currency has been massively devalued, and we are now printing extra money.
	It is often said by the Government that other countries have experienced recession too, and that is of course true. When those countries were growing, however, we never heard from the Prime Minister that Britain's rising prosperity was due to international factors that had nothing to do with the policies of his Government. Instead, all his plans were predicated on the best-case scenarios, and that left Britain dangerously over-exposed. When this Prime Minister boasted that we had abolished boom and bust on his watch, he was half right-he just got the wrong half.
	I want, however, to turn to where the Prime Minister has a valid story to tell. It has been said-and the Chancellor said it again today-that our borrowing is at a level similar to that of other comparable countries, and that is broadly true. We were told by our iron Chancellor that we would not let our debt rise above 40 per cent. of GDP, but it is now doubling to 80 per cent. Even so, it remains lower than the debt level in Italy-although by some measurements Italy's economy is now bigger than ours, and our total debt is still rising faster than Italy's.
	It is also true-and in this the Chancellor, the Prime Minister and others have a point-that by historical standards Britain's debt looks manageable. It may be rising to 80 per cent. now, but we have just been hearing from the right hon. Member for Birkenhead about the consequences of 1945, when our total debt as a percentage of GDP stood at a terrifying 250 per cent.
	The second world war is always rightly portrayed in terms of the human casualties that were suffered, but until I saw that figure I had not fully appreciated the terrifying scale of indebtedness that we as a country faced at that time. We may be broke now, but we have been three times more broke in the past.

William Cash: Given my earlier remarks about the true level of debt, would the hon. Gentleman be surprised to hear that aggregating the bank bail-outs-never mind the cost of the RBS-Lloyds deal that was never even disclosed-would put the actual liabilities in the region of £3.84 trillion? He has just given the figures for 1945, but that sum is equivalent to 274 per cent. of GDP.

Jeremy Browne: The hon. Gentleman makes a valid point. I shall not comment on his specific statistics, but merely observe that I am painting the rosiest picture that I can of the current state of the public finances.

John Redwood: Does the hon. Gentleman agree that there is another very big difference between 1945 and now? In 1945, it was decided by common acclaim to get the deficit down by sacking, through demobilisation, almost 1 million public officials who were in the Army or serving the Army. The Government are not about to do the equivalent now.

Jeremy Browne: There is another, slightly more obvious difference between now and 1945. Then, we had run up a spectacular debt that changed Britain's place in the world, in many ways for the worse. It left us vulnerable and led to years of rationing and hardship for households right across the country, but we had something pretty spectacular to show for that greater debt-we had defended ourselves against an unprecedented threat to our freedom and independence. Sixty-five years later, it is somewhat harder to work out what the current Prime Minister's monumental achievement from our rising debt is.
	Instead, our Prime Minister today stands metaphorically on the observation deck of the new Burj Khalifa skyscraper. Lifted high on a mountain of debt and hubris, he surveys a scene of economic depression and endless desert.

Graham Stuart: The hon. Gentleman is right to follow the right hon. Member for Birkenhead (Mr. Field) in emphasising the severity and seriousness of the current situation, but the big difference between 1945 and today is that then the war was over and the expenditure on it had finished. In contrast, the unsustainable level of expenditure that we have today has not finished, and there does not appear to be any credible offering from the Government as to how they are going to bring that expenditure under control. We just have this Bill, which halves not the overall debt but just the rate at which we will increase it. That is no real solution at all.

Jeremy Browne: The hon. Gentleman is right that our debt-to-GDP ratio fell, in a good way, quite markedly after the second world war. Nevertheless, it is still true that we have previously been in territory where that ratio has been well over 100 per cent. We are not in that position at the moment.

Kelvin Hopkins: I am glad that the hon. Gentleman has referred to 1945, because we had a wonderful Labour Government who brought us out of that terrible time. Does he agree that, instead of deflating our way out of the massive problems that we faced at that time, we grew our way out of them? We did not spend our time talking about what we had to cut: in fact, we created a national health service, for example, in which we spent more.

Jeremy Browne: Perhaps I should avoid a protracted historical discussion, although I always thought that the hon. Gentleman's favourite Labour Government were in office during the period of achievement from 1976 to 1979. However, we have managed to identify another one whom he holds dear to his heart.
	I was talking about the Prime Minister standing on deck looking at the consequences of his policies. In that economic desert, we find before us this Fiscal Responsibility Bill-a pathetic and dangerous piece of legislation.
	It is pathetic, because we should not need a new law to make the Government do their job. We just need the Government to do their job. The Chancellor is like a man with a new year's resolution to lose weight. He knows that he desires the outcome, but he doubts his ability to make the disciplined decisions that are necessary. He therefore passes a law requiring himself to lose weight, confident in the delusion that he can now tuck into a diet of endless doughnuts and pork pies. As people across the country are daily discovering to their dismay as they examine their discarded gym memberships and low-fat cookery books, there is a world of difference between resolving to do something and having the fortitude to see it through.
	The Chancellor has flunked the difficult decisions at every turn. The media were briefed that December's much delayed pre-Budget report would be bristling with tough choices. It did contain an announcement from the Chancellor on pay restraint, as well as the bizarrely counter-intuitive set of higher taxes on employing people, but it then emerged that the extra spending in the PBR added up to more than the extra revenue that would accrue. As in the Prime Minister's Labour conference speech, the goodies kept on coming, but these really were empty promises.
	What was the result of the PBR? Having previously said that the deficit this year would be £175 billion, and after announcing a slew of supposedly tough choices in the pre-Budget report, the Chancellor was able to announce that the deficit would now be £178 billion, falling next year-during a period when the economy is forecast to grow in all four quarters-to £176 billion. That is why, speaking as a man still just in his 30s, I know that our national debt will not reach 40 per cent. again until I am in my 60s. The Chancellor's legacy is a burden that blights an entire generation.
	It is not an enviable record, but the Chancellor has at least one partial admirer. I was reading  The Economist over Christmas. Its edition of 19 December identified the Heroes of New Labour. Underneath, it added, Yes, there have been some. There are, to be precise, five heroes of new Labour. None are current MPs; two have died, sadly; and one, Lord Adonis, experienced his finest hours as a member of the Liberal Democrats. The Chancellor is not one of them, but he warrants a footnote under the heading The nearly men. The article says:
	By stubbornly keeping his job, Alistair Darling, the unfortunate Chancellor, probably prevented a desperate fiscal plight from becoming even worse under a putative successor.
	His biggest legacy, his entry to the new Labour hall of fame, is to have prevented the right hon. Member for Normanton (Ed Balls) from making a bad situation even worse. We are all genuinely grateful, but the Chancellor's hopes must have been so much greater as he walked into this Palace as a new Member of Parliament many years ago.
	The Bill is not only pathetic but dangerously wrong-headed. How can we know what the world will face in 2016? We may confront the scale of threat to our national security that demands the wholesale economic sacrifice that helped us to win the second world war, which we have discussed in this debate. What are we meant to say if that happens-Sorry, we are not fighting. We can't due to our obligations under clause 1 of the Fiscal Responsibility Act 2010? We may face another recession-it is entirely possible; the so-called double dip scenario. We all hope that it is unlikely, but it is entirely possible. What then? What are we meant to do? Are we meant to say, Sorry, all the hospitals are going to have to close. That is our obligation under clause 1 of the Fiscal Responsibility Act 2010? The Chancellor said today that that would not happen because the Chancellor of the day would come to the Dispatch Box, rip up the Act and say, Don't worry, I never meant it in the first place. That raises the question why we are all here pretending that this is a serious piece of legislation.
	We need real determination to plot a path to sustainable recovery, and that requires real political leadership. So how dispiriting it is that the so-called official Opposition woefully fail to match the scale of the task before us. The Conservative shadow Chancellor, in his speech to his own conference, made a virtue of his supposed resolution. It was an interesting speech, but as he confirmed his intention to target big tax cuts on the very richest households, he told us:
	We are all in this together.
	As I watched the television and listened to his speech, I was initially reminded me of the immortal question asked to Debbie McGee-to paraphrase: What first made you sceptical about the shared austerity message of millionaire George Osborne?
	The shadow Chancellor went on to say that he had identified £7 billion-worth of savings. Let us leave aside for a moment the fact that some of those were costed in 2020 prices and failed to match any sustained scrutiny. This is the crucial bit. The Conservative shadow Chancellor went on to say:
	Anyone who tells you these choices can be avoided is not telling you the truth.
	But that was not really the truth. We have a structural deficit of about £85 billion, so what the Conservative shadow Chancellor told us was perhaps at best one 12th of the truth. It might have been up to a point the truth, but it certainly was not the whole truth and it certainly was not nothing but the truth. Instead, just yesterday we had the Conservatives splashing £400,000 on posters claiming that they would aggressively cut the deficit, but they gave no specific proposals except a single pledge to spend more.

David Gauke: Those of us who were listening carefully to my hon. Friend's speech at that party conference will know that he stated that we did not claim that we had set out a full policy. What he announced was not going to address the full structural deficit, but we had provided an indication. Given the criticisms made by the hon. Gentleman, does he have a full plan to address an £85 billion structural deficit?

Jeremy Browne: Let me come to our proposals in just a moment. People will be keen to hear them.

Lorely Burt: Given that 70 per cent. of the deficit is structural, and therefore pre-dates the current financial turmoil, does my hon. Friend think that a Bill that provides no detail about how the Government intend seriously to tackle the problems with the public finances demonstrates any fiscal responsibility at all?

Jeremy Browne: I accept my hon. Friend's point. The Bill is near to worthless, but it is a valid point that the Conservatives have just spent a lot of money on a poster campaign across the country that does two things: says that they will try to tackle the deficit and identifies one measure that does nothing to tackle the deficit. That is the point that the right hon. Member for Birkenhead was making. If anything, the deficit would be even greater were the Conservatives' proposal to be implemented. This is the new, cool Steve Hilton-aroma Conservatism, pointing in different directions at the same time. It is what Tony Blair called triangulation and the third way, what fashionable Cameroons call red Toryism and the rest of us call an abdication of leadership. I do not doubt that the Conservative leader's greatest priority is the NHS, but he does not mean the national health service; he means the Notting Hill set.

Philip Davies: The only interpretation that anyone can put on the hon. Gentleman's remarks is that the Liberal Democrats propose a huge cut in spending on the NHS. By how much does the hon. Gentleman's party think that the NHS budget should be cut? Everyone would be interested in that.

Jeremy Browne: We are getting to the interesting nub of the argument. We are saying that there is not a good reason to ring-fence Departments. That does not necessarily mean that the Department of Health would be cut, but the implication of the Conservatives' policy- [ Interruption. ] Hon. Members should hear me out; I am doing the hon. Gentleman the credit of taking him seriously. The implication of his party's policy is that the cuts in schools, police and our soldiers in Afghanistan would be greater, deeper and more fundamental than they would be if all the Departments took the burden of the deficit reduction. That has got to be the case. If the Conservatives would make the cuts across a smaller number of Departments, the cuts would have to be deeper to make up for the fact that some had been ring-fenced. That is a serious question that the Conservative party will have to explain to teachers, police officers and many other public servants and people who use our public services.

Stewart Hosie: I know that the hon. Gentleman is getting dreadfully angry. There is a big fight between the Liberals and the Tories in his seat in the south-west, and it is all dreadfully vexed. The hon. Member for Solihull (Lorely Burt) said that 70 per cent. of the deficit was structural. That comes in at about £125 billion. Scotland's share of that would be about £11 billion-the total cost of the NHS in Scotland. How many nurses and teachers does the hon. Gentleman plan that the Scottish Government should sack in order to meet the Liberals' version of cutting the debt?

Jeremy Browne: My understanding is that the Scottish National Party aspires to be in coalition with the Conservatives after the general election, so they may be able to come up with a joint plan at that stage. Let me get to our deficit reduction proposals. The straightforward answer is that we are not saying that Departments should be ring-fenced. In the mind of some Members, the right hon. Member for Birkenhead may have exaggerated in his speech the scale of the threat we face, but he rightly warned of the scale of the problem, as I tried to do in the introduction to my speech. Our economy is 5 per cent. smaller than it was a year ago. We cannot carry on with all this share the proceeds of growth-with a robe of feel-good Conservatism, without wearing a tie-saying that there are no hard choices to be made. It is not a realistic way forward.

David Gauke: I just want to be clear. The hon. Gentleman has set out the argument for cutting spending across the board, so the implication is that there would be cuts in the NHS budget under a Liberal Democrat Government.

Jeremy Browne: No, I have not said that.

Philip Davies: What have you said then?

Jeremy Browne: I will tell you if you listen. I said that no Department is ring-fenced. I have said not that there would automatically be cuts in every Department, but that we should not have a policy of ring-fenced Departments. I will give way to any Conservative Member who will say that all the extra money that Labour has spent on the NHS has been spent 100 per cent. efficiently and that there is no scope for finding efficiencies in the national health service. If there is scope for finding efficiencies in the NHS, the question Conservative MPs have to ask themselves is why they would cut efficient parts of schools, the Army or the police beyond a point they would otherwise need to do, to support inefficient parts of the national health service. That is a valid question, which the Conservative party, due to marketing reasons, is unable to answer.

Andrew Pelling: Will the hon. Gentleman give way?

Jeremy Browne: No, I want to make some progress.
	I want the deficit cut, which is why my party has consistently made bold and eye-catching contributions to our national debate on that subject. That is why in the past months we have called for pay restraint, which protects those on low incomes but would make significant savings of billions of pounds over two years. As I have just said, Britain is almost 5 per cent. poorer than it was a year ago and we cannot afford a national wage bill that pretends nothing has happened.
	We have led the way in saying that some major capital spending proposals are unaffordable. We have said that households with incomes that would be the envy of the majority of people should not also be topped up with unaffordable extra tax credits. We have identified specific projects that we believe can no longer be financially justified. That is why in a Statutory Instrument Committee in February-less than a year ago-I argued against both Labour and Conservative Front Benchers that the so-called baby bonds were no longer affordable.
	There was great unity among the Front Benchers of the two old parties; they were committed to the old policies, as though the deficit had never happened, but later in 2009 the Conservative shadow Chancellor, to his credit, belatedly caught up, telling his conference that baby bonds are
	a luxury we can no longer afford.
	Where the Liberal Democrats lead, others in the House follow. [Hon. Members: Hear, hear.] It is true.
	I am constantly looking for new savings. I realise the enormous challenge that a deficit of £500 million extra every day poses. I was looking through  Hansard a couple of weeks ago and I found a question from the Member who is known to the Conservative shadow Business Secretary as Philip Holland, but is better known to the rest of us as the hon. Member for Runnymede and Weybridge (Mr. Hammond). Anyone anxious about the Conservatives' plans for deficit reduction needs to understand how seriously they are taking the task. I shall read out that brief question to give the House a flavour of the magnitude of the Conservative approach to the task. The question is headed Christmas:
	Mr. Philip Hammond: To ask the Secretary of State for Wales how much his Department has spent on Christmas (a) cards, (b) parties and (c) decorations in the last 12 months.
	Mr. Hain: In the last 12 months, my Department spent £385 on Christmas cards and £1,054 on receptions. We did not purchase any Christmas decorations.-[ Official Report, 10 November 2009; Vol. 499, c. 178W.]
	The shadow Chief Secretary's job is not just to clear up the mess left by his leader; he is also asking the brave deficit reduction questions that can transform our country's prospects. I have done the calculations, and the savings identified by the hon. Member for Runnymede and Weybridge equate to 0.26 seconds of national debt-the gap between Usain Bolt and the man who finished second, with the Conservatives left on the starting blocks.

Kelvin Hopkins: I thank the hon. Gentleman for giving way, as I indicated a little while ago that I wanted to intervene.
	The core of the hon. Gentleman's rather rambling round-about speech is squeezing public expenditure-wages, capital investment and other spending programmes. Surely that will deflate the economy and raise the level of unemployment, which will make the problem worse by reducing tax revenues and increasing benefit payments.

Jeremy Browne: I have acknowledged in the past, and will acknowledge again, that the Chancellor is right to be concerned about debt. He is also right to warn that it is possible to cut too deep and too quickly. Navigating a course from our current dire position to calmer waters is a real challenge for the Chancellor and for whoever is in government over the next decade or more, but it is a great political and economic challenge that requires great political and economic skill from the Chancellor, the Prime Minister and the rest of the Government. It does not require legislation of the sort that is before us this evening.

John Hemming: Does my hon. Friend share my concern that although the Government have a model of the economy written in Fortran, which they will provide, they will not provide the data that go into the model? Proper scrutiny of what the Government are doing is, therefore, difficult, as is making the right judgments, such as whether we are going too deflationary. Would it not be better if the Government were to release the data that go into the Treasury economic model, to enable people to make such judgments more effectively?

Jeremy Browne: It would inform the debate, although one is sceptical about the accuracy of some of the data. Recently I told the Chancellor that he had revised upwards his borrowing figures for this year. He appeared to imply that that had not happened, but I have gone back through the figures. In his 2008 Budget-less than two years ago-the Chancellor announced that borrowing for the year 2009-10 would be £38 billion. At the time, some commentators were shocked at the scale of our predicament. Later in 2008-the pre-Budget report just over a year ago-the figure for this year was revised up to £118 billion. In the 2009 Budget, we were told that instead it would be £175 billion, and now the latest estimate for the year that is about to finish is £178 billion. That gap-between the £38 billion forecast less than two years ago and the £178 billion forecast today-represents the Chancellor's credibility in forecasting and deficit reduction. We are borrowing £140 billion more this year than the worst-case scenario forecast less than two years ago.
	Anyone wanting to know the worth of the legislation need only look at the helpful explanatory notes provided to us all. One line, on page 5, sums it up perfectly:
	There are no significant financial effects of the Bill.
	Never has anything been said with such brevity and accuracy in an explanatory note, or with such devastating political insight in a document that does not normally verge into that territory.
	The cupboard is bare, and too much of the political debate is empty. No wonder that Labour and the Conservatives, in the initial skirmishes of the general election campaign, now both look to the Liberal Democrats for leadership and inspiration.

Andrew Tyrie: I did not think it would be possible for anyone's credibility to emerge from this debate weaker than the Government's, but after that speech I am beginning to wonder whether it is not the Liberal Democrats who have damaged themselves more in our discussion tonight. That really was a speech that missed the target entirely, if I may say so, yet it is a target that is pretty easy to hit.
	The language that others have used about the Bill is overwhelmingly condemnatory-a con trick, vacuous, irrelevant; I will not go through all the quotations that my hon. Friend the Member for Tatton (Mr. Osborne) read out. The one bit I agreed with the Liberal Democrat spokesman about was when he described the Bill as a dangerous and pathetic piece of legislation.
	The Bill will make bad law. It is declamatory. No explanation has been given about how it will be enforced. It will carry no credibility in the markets. Indeed, it could further erode credibility in the markets, as it may appear no more than a rhetorical substitute for the action we need. In other words, it will appear to be what it really is-mere words.
	But it is not just the confidence in the markets that I am worried about and that could be eroded. Legislation such as the Bill erodes confidence in Governments and gives politicians and Parliament a bad reputation. It is corrosive of respect for the rule of law and our institutions. The Bill is, of course, a political document designed to substitute for the markets' lack of credibility for the numbers in the pre-Budget report and the Red Book about how the deficit will be filled.
	That credibility deficit has three main causes. The first and immediate cause is that three quarters of the gap between spending and tax is now acknowledged, even by the Government, to be structural-that is to say, it will remain even after the effects of the recession on the deficit have been unwound. It has been created largely by explicit mistakes of Government policy in recent years, not by the crisis. The policy in question is the Brown spending binge that fuelled the boom and aggravated the bust. The Government increased public spending by much more than the economy was growing, and for many years.
	Spending has increased from 37 per cent. of GDP to 48 per cent. of GDP. In some ways, that is the most dramatic change in the structure of the UK economy since the wartime measures were unwound. Many of us on the Conservative Benches warned that such rapid spending increases posed a danger for fiscal policy. When I was shadow Paymaster General, I gave several warnings myself. I pointed out that
	we could be heading for a serious financial threat to our fiscal position.
	It is, I said,
	extremely worrying that we should be facing that threat at this point in the cycle.-[ Official Report, 17 March 2005; Vol. 432, c. 487.]
	The second cause of the credibility deficit-I said that there were three-is the sustained lack of transparency in the Government's accounts. If the markets cannot be sure of the Government's figures, they will fear the worst. Examples of the impenetrability of the accounts are legion. What really is the scale of the Government's liabilities? We cannot be sure. We have had some discussion of that this afternoon. It will fall to an incoming Conservative Government, aided by the office of budget responsibility, to find out.
	The third main cause of the collapse of credibility has been the emphasis in presentation on language rather than substance, and spin before action in the conduct of fiscal policy over a substantial period. The Bill is just one further illustration of that phenomenon-a phenomenon that we have had to endure for years. For example, we now know that the so-called fiscal rules were mere words. Their credibility was shot when the Prime Minister, who was then the Chancellor, fiddled his start date for the business cycle in July 2005, immediately after the election, in order to avoid admitting that he was breaking his own fiscal rule. Empty economic rhetoric has been the Prime Minister's stock in trade for a long time. It was, after all, the Prime Minister who, as Chancellor, as late as 2007 said in the House that
	fiscal discipline is the foundation of the strength of Britain's finances.-[ Official Report, 21 March 2007; Vol. 458, c. 816.]
	Handing the assumptions in the Red Book to the Comptroller and Auditor General of the National Audit Office for supposed vetting was another gesture that eroded credibility. It sounded good but it was an insubstantial thing to do, as the markets soon discerned and as the Comptroller and Auditor General more or less admitted in evidence in public session in a Committee. In the end, it has only made Labour's credibility problems even worse.
	I said at the beginning that the three main causes of the credibility deficit-the structural origins, the lack of transparency, and the empty rhetoric-cannot be addressed by Labour's current measures, but they can be assuaged by other practical steps. First, on the structural gap between spending and tax, the obvious answer is to set out how the gap will be plugged. That is what we have just been discussing with the Liberal Democrats.
	In practice, that means explaining how public spending will be cut. It means reversing a proportion of Labour's spending binge. But Labour have done the opposite. They have announced increases in spending of £3.5 billion and they have even cancelled the spending review. That leaves a gaping hole in the credibility of Labour's overall financial policy.
	Members of the Conservative Front-Bench team have been courageous in coming forward with a number of tough measures in recent announcements and have talked of an age of austerity. It is fair to say that the Conservative party has gone further than either of the other two in making a clear case for the reality of the situation-the reality that we will have years of very difficult fiscal policy before we can get overall financial policy back on an even keel.
	More will need to be done by us from within Government, where I hope we soon will be, to find out the true scale of the deficit and to make it fully transparent. Then an analysis of the relevant merits of various additional measures can be done with full civil service support. I cannot stress too strongly that it is only by working with civil servants, drawing on their expertise and reviving a Whitehall culture of thrift, which has sadly been lost, that we can hope to restore Britain's public finances. The main reason for the binge was political, but a major subsidiary reason has been Labour's failure to mobilise Whitehall to the cause of the efficient use of public money.
	The second point that I want to make in this respect is on the credibility of the numbers on the basis of which decisions will be taken. Have Labour really been cooking the books? Perhaps scarcely at all. Perhaps a lot. We do not know. Twenty years ago I left the Treasury and went to spend a very enjoyable year at Nuffield college, Oxford. There, among other things, I wrote a short book on public expenditure and fiscal policy. Two of the suggestions in that book, eventually published in 1996, were to create an independent national statistical office and to create a fiscal policy committee charged with the task of producing the forecast and thereby bolstering the credibility of the Government's accounts.
	From the Front Bench a little over five years ago, I worked up those proposals at the request of the then shadow Chancellor, my right hon. Friend the Member for West Dorset (Mr. Letwin). They were subsequently published as The Independent Fiscal Projection Committee and A Framework for Statistical Independence. The Government responded to the first after the election by giving independence to the Office for National Statistics, but the second pillar of the plan was wholly ignored by the Government.
	I was delighted when my hon. Friend the Member for Tatton took up the latter idea. His proposed new body, which he has called the office for budget responsibility, goes further than I proposed in 1996-a good way further-and further than my right hon. Friend the Member for West Dorset suggested in that document. I believe that what my hon. Friend has proposed will contribute to the economic credibility needed to reduce the deficit in one crucial respect, which he mentioned in his speech. It will put the Government at one remove from the forecasting business, with all the temptations to fiddle the forecasts that can come with that.
	Those two measures that I spoke about earlier, a credible plan to reduce public spending and a credible, independent, depoliticised and verified forecast, will act on the credibility deficit. That is important because, as the right hon. Member for Birkenhead (Mr. Field), who is no longer in his seat, pointed out, the credibility issue is not about mere words. It comes with a price tag, potentially huge in terms of loss of market confidence in plans to fund the deficit and service the debt stock. It is the Governor of the Bank who told us that the deficit, at nearly 13 per cent. of GDP is truly horrendous. The debt stock will have doubled as a percentage of GDP to nearly 80 per cent. shortly, as the spokesman for the Liberal Democrats, the hon. Member for Taunton (Mr. Browne) pointed out.
	Even if credibility is eroded only to the extent that it represents, say, 50 basis points on debt servicing costs, we are talking about billions and billions of pounds in higher taxes or lower public spending for a generation. Even more perilously, the loss of credibility could manifest itself in a collapse in people's confidence in the currency.

William Cash: I congratulate my hon. Friend on his prescience and look forward to reading the pamphlet that he produced at Nuffield college, Oxford, because it sounds very interesting. He mentioned thrift, but the issue is not just about efficiency. Does he agree that however much we develop models and look at the bond market, at credit risk and at the rest of it, until real change is made, the scale of the problem will require an adjustment on the statute book to the duties that are imposed on all public authorities? That is a serious and difficult problem, but it is one that we will have to address. We cannot go on imposing legal duties, with which local, national and public auditors are required to comply, and at the same time step up the amount of legal liability that we impose on all of those public authorities.

Andrew Tyrie: My hon. Friend returns to a point that he made in an earlier intervention. I listened to it carefully, and I probably agree. The Americans deal with the same issue using their distinction between discretionary and non-discretionary funding in the federal budget.
	This debate takes place against the backdrop of an election. The respective claims of the major parties on the public finances will come to the fore, and the danger is that there will be a bidding war. Each party will claim that it can do more than its opponent to tackle the deficit, with less pain than its opponent. That will not make for an enlightening election. It could lead to a further erosion in the credibility of politics and politicians, to which I alluded at the beginning of my remarks.
	I am grateful to my hon. Friend for mentioning my book. In it I suggested a way out of the problem-a way that might bolster rather than erode the credibility of respective claims of the parties, particularly at election times. My proposal was quite straightforward: in addition to creating a fiscal policy committee, which is similar to the proposed office of budget responsibility, I suggested that to bolster the credibility of the Government and Opposition parties' policies on tax and spending in the months prior to an election, that body should examine all their pledges and come to a view about the bottom-line effect on the deficit.
	It would be quite reasonable to ask that institution to undertake that work for any party registered under the Political Parties, Elections and Referendums Act 2000 and to publish the assumptions on which it came to its conclusions about the scale of the parties' pledges and their implications for public borrowing. If it did that it would concentrate the minds of politicians when they make exaggerated claims on economic and financial policy, especially at election time. Such a measure would raise the quality of debate in elections and of public discourse about economic matters between elections, giving the public greater confidence in the statements of politicians.
	A major Opposition party might be reluctant to subject itself to such scrutiny, but what credibility would such a party have? It might supply inadequate information about its policies, thereby preventing meaningful costings to be made by the office of budget responsibility. If it did, the OBR should say so and let the electorate draw its own conclusions. At election times, such a measure is still achievable, even if things have to be done in more of a rush. The Government's costings would be largely straightforward: after all, one function of the OBR would be to have a firm grip on Government pledges. In any case, before the Government went to such a committee, they would have available to them the full resources of Whitehall in order to cost any additional pledges that they wished to unveil in their manifesto.
	As for the Opposition parties, any party worth its salt and challenging seriously for power would want the credibility of its economic plans endorsed by the OBR. The party would be likely to engage with the office well before it published its manifesto, and it should be permitted to do so confidentially. In Committee I intend to table an amendment to give effect to this proposal, and I very much hope that it secures cross-party support.
	The agenda of British politics has been set by Labour: it is to repay Labour's debts. That will be a huge and painful undertaking, affecting the entire British population. Labour's only hope of restoring confidence in itself would have been to set out the spending measures required to plug the deficit. That is Labour's duty, after all: it is still in government. But even if it had done so, I am not sure how much weight it would have carried with the markets or with the public at this stage, because the canker at the heart of Labour economic policy derives not just from its credibility on fiscal policy, but from a deeper collapse in confidence: confidence in the Government's ability to take any correct decisions for the country-the confidence that can, in turn, be built only on the sound foundations of economic competence.
	When the economic history books are written, the writers' pens will above all linger not on the Government's intentions but on their incompetence. How was it that a Government inheriting such a strong economic legacy could have so easily squandered it? How was it that so little could have been bought with so much extra public spending? Even two years into this crisis, Labour still tries to return to the tactics of the past decade-the tried and failed tactics of rhetorical devices, which we have in this Bill, as a substitute for something solid. The Bill's title could usefully serve in one of those history books as the heading for a final chapter. It could read: All credibility gone: the Fiscal Responsibility Bill is brought to the House. It would describe willing the end without the means and yet another addition to the catalogue of gesture politics.
	The decision to postpone the spending review has been crucial. Those who argue that the Bill is merely a cheap political trick to avoid disclosing the pain that Labour would have to inflict on the electorate get at only half the truth. The Government appear to have no notion of how to implement the measures required to give effect to the good intentions of the Bill, and that is symptomatic of so much policy making over the past decade. Their response to any problem has all too often been to seek to legislate it out of existence, and, when disappointment has inevitably followed, the tendency has been to blame others, especially Whitehall officials, and the wider public service, for a so-called failure to deliver. We have therefore had a succession of initiatives, most of them equally misguided, seeking to deal with the problem through efficiency units, a succession of studies, the tsars and so on.
	Ministers hoped that those measures would compensate for Whitehall's alleged shortcomings, when the shortcomings that mattered were really much closer to home. It is the bankruptcy of ideas and, above all, of understanding how to translate intentions into action, more than the financial bankruptcy, which this Bill illustrates.

John Redwood: I remind the House that I have business interests with a multinational industrial company and an investment management company.
	I rise to remind the House that the big financial crisis through which we have been living was in origin a crisis of borrowing too much. The Government now admit that their regulators were asleep on the watch, and that banks borrowed too much. It is clear that individuals and families borrowed too much. They felt that they had to because the erratic and expansionary monetary policy followed on both sides of the Atlantic fuelled a house-price boom and took houses and flats ever more beyond people's reasonable expectations of being able to service a mortgage. They were dragged into borrowing too much to meet those giddy house prices based on the monetary excess that the Government and their agents had unleashed.
	Industry and commerce also borrowed too much, and in some cases, particularly under the private equity model, the levels of leverage for companies were very high and made it difficult for them to trade profitably and successfully. Yet the Government, who tell us that the private sector sinned and borrowed too much, now seem to believe that the way to correct the problem is for the state to borrow too much in its turn.
	My first message for the Government is that we cannot solve a crisis of over-borrowing by borrowing too much in the state sector. We cannot resolve the British state finances by underwriting every bad debt and every bad loan throughout the banking system-we have to get the banks to sort it out and to take more of the hit. This Government have dragged the taxpayer and the state into accepting far too much risk and far too much debt obligation. That is why we are now on the verge of another nasty phase to this long and tragic financial crash: the phase when the state is made to realise that it is borrowing too much, and the markets and others force the state and its agents-the Government of the day-into getting their own house in order because otherwise they will find that they cannot borrow at anything like a sensible rate, if at all, or on the scale that they wish.
	I think it is agreed ground between the three largest parties in this House that the deficit is too large, that it is growing too quickly, and that it needs to be controlled within the next four to five years. It seems that the principal disagreement remains between the Government and the rest of us about the timing of when to start to control borrowing. It is less painful to start to control borrowing now than to leave it for another year. It will do less damage not to have borrowed another £200 billion before deciding to give up the bad habit. If someone is an alcoholic, the time to stop drinking is today-it is not a good idea to have another year of drinking very heavily and damaging their liver. They know they have to tackle the issue, so why not start now? They may then discover that they have a longer and happier life, because there is life after alcoholism, as all those of us who are not alcoholics are pleased to report to anyone who might be in doubt.
	We have to say exactly the same thing to this Government about borrowing. There is life for a Government after borrowing too much. It can be a very good life where the economy will function better, not worse-a situation where the public services are better run, not worse run, and where if they put quality, efficiency, productivity and performance into their vocabulary when managing the public services, they may well discover that they can run them better and provide more for considerably less input than the current costs. As my hon. Friend the Member for Chichester (Mr. Tyrie) remarked, one of the extraordinary things about this Government is how they managed to spend so much money to so little effect; that is the tragedy that we have to tackle. Unfortunately, the Bill is not the means to do that, as my hon. Friend the Member for Tatton (Mr. Osborne) pointed out with great humour and aplomb in noting that it sets out to have the Treasury controlling the Treasury. Why should the Treasury need to control itself? Why can it not run self-disciplined budgets in the normal way? Why can it not use the existing mechanisms of pre-Budget reports, Budgets, forecasts and economic reports to this House to provide the discipline that is required?
	I should like to pause for a little on the details of the Bill, which I hope will be substantially amended if we have to go through the rigmarole of legislating it at all. It is bizarre in its own terms and seems to be against the run of the advice that the Chancellor has regularly given us on how to run an economy in trouble. Clause 1 tells us that in
	each of the...years 2011 to 2016, public sector net borrowing expressed as a percentage of gross domestic product
	has to fall compared with the preceding year. To ensure that it falls by a reasonable amount, there is the added rider in subsection (2) that it needs to halve by 2014. That means, as I reminded the Chancellor when he was here earlier, that in any given year borrowing could go up. That is even true in the period when one is trying to halve borrowing, because one could leave it all to the end and suddenly have very big cuts in the last year or do it all earlier and then have greater freedom. Because it is expressed as a proportion of income, there could be individual years when borrowing was going up, assuming that the economy was growing. Perversely, however, if in that period we had another unfortunate year when the economy was not growing, it would be necessary to reverse and to cut borrowing in cash terms. That is the exact opposite of the natural stabilisers that the Chancellor has always told us are very important, as Conservative Members have accepted. We agree that the natural stabilisers are important if one gets into a position where there is such a big fall in output as this Government have presided over. The Government should change this and come up with a formula that recognises that it is necessary to take into account the state of the economic cycle.
	The second part of clause 1 contains the most important part of the whole proposition-that borrowing should be halved as a proportion of gross domestic product. Given that under current economic policy we are not going to get much growth, that means that it is necessary, roughly speaking, almost to halve the current cash deficit, so we are talking about somewhere between £80 billion and £100 billion of spending cuts, tax increases or some combination of the two. There is always a temptation among those on the Labour Benches to believe that tax increases are the better option, but if they choose the wrong tax increases they could make the position worse. If enterprise is taxed too much, there will be less of it and they may end up with less revenue. They also like to tell themselves that if only they could at last get to grips with tax evasion and avoidance all our problems would be solved, whereas after 12 years of their trying to do that, all the evidence shows that it does not solve the problem as it is a very small part of a much bigger problem.
	We cannot get away from the fact that in order to cut the deficit by this magnitude, even under a Labour Government with some strange tax plans, most of the burden would have to fall on public spending, and trying to cut public spending by £80 billion to £100 billion has proved to be difficult in the past. The Government clearly find it impossible because they have produced a Bill for the House of Commons demanding that we do this, yet there is not a single item in the supporting papers or speeches to tell us how they would achieve it. Worse than that, they have cancelled the normal public expenditure review setting out detailed plans for the future because they clearly find it too difficult, too embarrassing, or both, to have to admit that the large chunks of money that they have committed in the past are no longer affordable and perhaps discover that some of those chunks of money are indeed very wasteful.

William Cash: My right hon. Friend is making an excellent speech. Does he agree that there is another factor apart from having to review legislation, which imposes the duties to which I have referred-that is, the need to emphasise the necessity for enterprise and small businesses from which one can generate the growth that is required in order to fill the gap? After all, not one penny of public expenditure comes from anything other than the tax revenues from private enterprise, and if we do not put our emphasis on the growth of small businesses and enterprise companies, we will not be able to close the gap, which makes complete nonsense of this ridiculous Bill.

John Redwood: My hon. Friend is absolutely right. We clearly need a lot more growth; I think that that is also common ground between the main parties in this House.
	The evidence of our past successes and failures as a country is very clear. When a Government have had the courage to cut the marginal rates of income tax on people of enterprise and investors and to cut the rates of profits tax and other taxes on employment in small businesses, there has been a proportionate improvement in the growth rate and an increase in the tax take from those sectors. Governments who have gone for extremely high penal rates of tax on the rich, the successful and the potential investors who might do something to improve our economy have had the reverse experience. They have discovered that growth has slowed or gone into reverse, and that lots of bright and talented people have gone abroad because they do not wish to pay such tax at all. That would be even more true today in this extremely footloose globalised world. Surely we should learn the lessons of the '70s, when Governments had high taxes and it did not work, and the '80s, when they summoned up the courage to cut the taxes and it started to work rather well with the enterprise policies that were introduced. The same has been true all around the world. Wherever a country has had the courage to set very competitive tax rates on enterprise, business, success and investment, it has found that it gets a lot more revenue in.
	As I always try to tell the Labour party, the best way to tax the rich-I would like to tax the rich more as well-is to cut the tax rates, because we then have more rich people in this country who pay more tax, because it is less worth while to pay for all the accountancy advice to get around it, and venture more of their money. This morning I spoke to a successful entrepreneur who told me: I'm on strike. I was a successful entrepreneur. I sold my company because the climate was becoming so hostile in this country. I managed to sell up before the crash. I have no intention of going back in because they're making the climate even more hostile-I'll sit on my backside and do nothing for a bit.

Andrew Pelling: I know that it is politically difficult to say that one is in favour of bringing the 50 per cent. tax rate back down, but would that not be the best approach for an incoming Conservative Government so as to encourage enterprise?

John Redwood: I have made a clear statement about what I believe is the way that works best, and I trust that a future Government will be wise and will want to set competitive rates of tax on enterprise, success and rich people so that we tax them more in the way that I have described. That is clear advice that I am sure will not fall entirely on deaf ears, because it works and has worked in the past and elsewhere in the world.
	In clause 1, after the extraordinary claims and strange wording that I have mentioned, we go on to be told that in due course net debt has to start to fall as a proportion of gross domestic product, but only in the final year of the period. The Chancellor effectively confirmed that the Bill is drafted in that way because the Government do not believe they have any chance of getting net debt down as a proportion of our national income until 2015-16. That could well be after the next election but one, in two Governments' time rather than one. It is remarkable that they can be that precise in thinking that that will be possible by that stage. For once, I agree with their realism that, with their policies, they will not get net debt down any time soon, and not before 2015.
	My hon. Friend the Member for Stone (Mr. Cash) rightly pointed out that the debt is grossly understated in the figures that the Government use. The Office for National Statistics has got nearer to the truth. I have always cited a figure of £3 trillion-plus for the true level of debt and obligations of the British state. Now that the Government have gone to the aid of banks in difficult situations and allowed the pension deficits to build up so colossally, that is the kind of figure that we would come up with if the British state account were put on the basis on which the British state puts any reputable company account. I see no reason why it should be treated differently. Clause 1(3) is pretty meaningless, because the Government will clearly carry on using definitions of net debt that no one else believes. Everybody else knows that they greatly understate the position.
	That brings me to another problem with the Bill. The part about interpretation, definitions and so forth is one of the slenderest that I have ever seen in a piece of legislation. I presume that that is intentional and designed so that were there to be a future Labour Government in the time period in question, they could play all sorts of games with the definitions of net borrowing and net debt if things went wrong, just as Labour played all sorts of games with the cycle and the definitions of the golden rule in its earlier years in Government. The Bill is shoddy and unacceptable because there is no professionally and internationally agreed definition of the debt and borrowing that they are trying to measure. Doubtless they would want to leave quite a lot out by anybody else's standards of financial reporting.
	My hon. Friend the Member for Tatton made mincemeat of the Treasury imposing a duty on itself and of the fact that there are absolutely no sanctions on anyone involved in this sorry charade. It is not so much a case of Ministers giving themselves a get out of jail free card in case something goes wrong as giving themselves a card that says that no Minister ever goes to jail or suffers any other penalty of any kind, however bad, grotesque and wrong their implementation of the policy.
	The Bill is a worthless piece of paper and an unnecessary intrusion into what should be a serious debate. It will not take a trick with the bond markets in the City or with anybody in this place other than a few Labour loyalists. It is a political prank, an expensive press release. It is wasting the time of the House and it is completely unsubstantiated by any plans.

George Osborne: Say what you think!

John Redwood: My hon. Friend tries to tempt me to be a bit more outspoken, but the House knows me all too well-I am not characteristically outspoken.
	I return to the divide on the timing of the reductions that the Bill requires. The Government's case is that they should delay the reductions for about another year. That is felicitous, because it will get them through the general election period and put all the burden of the cuts on to a future Government, but perhaps they actually believe what they are saying. Maybe they believe this neo-Keynesian nonsense that they have come up with that the only thing that is sustaining the economy is the excess public spending and borrowing, and if they started to reduce it now, it would plunge the economy back into a nasty recession. I have some simple questions for them about that. If all this public spending and borrowing is so good, why is our economy still in recession, as the Chancellor admitted from the Dispatch Box? Why is it the only main economy in the world that is not out of recession? As they have made so much more of the matter and are borrowing so much more as a proportion of national income than most competitor and comparable countries, one would have thought from their analysis that we would be romping out of the recession ahead of the others. Instead we have been mired in it for all too long. Let us hope that we are now coming out of it. There is evidence of some revival in the private sector, which is most welcome.
	Another problem that the Government have with their punk Keynesianism is the idea that all this spending is somehow not getting in the way of borrowing and spending in the private sector, which of course it is. The only individuals and institutions in this country that can borrow on the scale that they want to at the moment are public sector ones. The Government have developed a sort of recycling machine whereby money is lent to the banks, who lend it back to the public sector, and the Bank of England prints the money just to ensure that the Government can afford to buy all the debt that they are creating to route through the public sector.
	The Government have a public financing system on a merry-go-round of borrowing and buying debt, particularly using the publicly owned banks, at the expense of everybody else. The small business people I speak to in my constituency and elsewhere tell me that it is still a nightmare trying to get the borrowing that they need to carry out their business, let alone expand it. Individuals are still finding it extremely difficult to borrow money that they might want to start up a business or buy an asset that they could productively use.

Angela Watkinson: My right hon. Friend stresses the importance of small businesses, which create local jobs for people who are unemployed. Once people are employed they pay tax, which goes into the Treasury, instead of living on benefits that come out of the Treasury, so it is a double whammy and a double benefit to the Treasury and the community.

John Redwood: I wish the Government would consider seriously the people who are unemployed and would like to set up a business of their own. They need access to bank credit, which they clearly do not have at the moment because of the distorted and broken banks and the regulation that is reinforcing that distortion. Those people also have a problem with the benefits system, and a good reform would be to make it easier for people to use the cover of benefit to get started. As my hon. Friend rightly says, we could then have a double win, because they would go off benefit altogether at a certain point and we would have tax revenue coming in as they started to pay themselves a salary or an income from their business. I hope that that point will be considered.
	The Government are in a hole with their argument that all this public spending and borrowing is sustaining the economy, and that it would relapse without it. They have against them the problem of international comparisons, but also that of historical comparisons. If we look at recoveries from previous, rather shallower recessions in this country, we notice a certain common characteristic. Usually, the recovery got under way when the Government of the day admitted that they had a budget problem and took action to control the budget deficit through a combination of tax increases and spending cuts. In 1981, famously, quite big reductions were made in spending to curb the budget deficit, and from the day of the announcement of those cuts the economy accelerated away into one of its long and successful periods of growth. Something similar happened after the exchange rate mechanism disaster of the early 1990s. Again, it was when the Government got a grip on the deficit that we ushered in a very long period of expansion under two different parties.

Philip Dunne: Does my right hon. Friend agree that, in addition to the Government's historical problems, they have a current difficulty in that they seem incapable of securing the support of a single Back Bencher for the vital debate on the most pressing problem that faces this country? Only those Back Benchers who support the Opposition, not the Government, have spoken.

John Redwood: That is a wise observation. Only one Labour Back Bencher is even present to hear of the Government's travails.

Stewart Hosie: The right hon. Gentleman makes an interesting point about recovery from the 1980-81 recession. He will of course recall that, even after its technical end in 1981, unemployment continued to rise for three full years.

John Redwood: That is a sad truth. All of us who lived through that were miserable about it, but it was good that we started to recover. The evidence shows that cutting public spending did not impede, but enabled the recovery. I remind Labour Members of Conservative Front Benchers' main claim on that point: we do not recommend spending cuts because we want to cut spending; we have come into politics because we want good public services-obviously, all politicians like to be involved with success in public services-but we believe that cuts are now essential because of the interest rate threat, which my hon. Friend the Member for Tatton correctly identified.
	The reason that Governments had to make cuts-and, in some cases, provide for tax increases-to get out of previous recessions was that, if they had not controlled the deficit, the deficit would have controlled them. If we do not control the deficit, it will exact an extremely high price on the rest of the British economy in the form of much higher interest rates and rationed credit, when we need low interest rates for longer and a more plentiful supply of credit from the private sector to get the productive economy moving again.
	Our problem is that we have a banking crisis and a crisis of over-borrowing. If we persist in over-borrowing in the public sector, we will not strengthen, but undermine or weaken the recovery. We will make progress more difficult, delay the necessary action and when the cuts-forced by market crisis, collapse of sterling or a bond crisis- eventually come, they will be more rapidly administered, more brutal and less well thought through. It is far better to plan and start to take action now so that the markets begin to say, Ah, they are serious; they understand it. We can give them a bit of time because we now know that they want to get on with it.
	If we constantly repeat, Tomorrow, tomorrow-mañana, mañana, the markets will not believe a word we say, our interest rates will continue to rise, as they have done in the past year, and our currency will continue to fall, as it has done in the past year. The Economic Secretary appears to think that that is funny. He should wake up to the reality over which the Government are presiding. Interest rates should remain low-we do not want them driven higher by market movements. Our currency is being driven lower, and we need a floor in sterling before the situation gets out of control. I hope that the Treasury sees the need for that. It would be good if it could persuade the Prime Minister-the First Lord of the Treasury-that he also has some duties, and that he does not fulfil them by tarting up a few words as a Fiscal Responsibility Bill. He has the power to instruct the Government to start to tackle the problem.
	Apart from the absence of Labour speakers, the interesting point about the Government is the absence of any commentary on how they might start to control the deficit by controlling public spending. Let me begin with an observation and then make an unpopular comment. A substantial reduction can be made in the number of people employed in the public services while delivering a good level and quality of public service in crucial areas. We currently do too many things badly. The Government have recruited another million public sector employees in the past 12 years and they have not always chosen well the roles into which to put those people. Often, they have complicated and made the process of public service delivery less efficient by over-recruiting in the wrong areas.
	The first thing I would do to try to tackle the deficit is put a control on all new recruitment. Every year, 5 to 10 per cent. of public employees leave, find better offers, retire, go off to have children and do not want to return to work. That means that the work force can be reduced quite rapidly over four or five years without compulsory redundancies and the costs and disruption they bring. If one has a strongly enforced natural wastage policy, one can give one's existing public employees much better chances of promotion and career development because some posts will need filling. They tend to be more interesting and better posts, so people can be accelerated into them and that can create a better life for them. We need to control our costs and do more with less. The biggest cost throughout the public services is that of labour.
	Of course, we need all the teachers, nurses, doctors and uniformed personnel that we have-I am not talking about those front-line jobs. However, most public employees are not in those jobs. We can introduce better processes, ensure that we do more with less and simplify the tasks. If we simplify the regulatory system, we need fewer regulators; if we simplify the tax and benefit system, we need fewer people clerking and administering those systems. That is what we need to do. Any company would do it when faced with the need for cuts on a proportionate scale that the Government face.
	Companies do not immediately ask, How can I cut my most important service to the public? or, Can I close down all my shops to show that I'm in a financial mess? or, Can I get rid of all the key personnel so that I can do a really bad job? Companies ask, Which people can I do away with so that it's least damaging to the business? To whom can I give more authority and promote, who can then do more for less? How can I win more business with fewer people? A company has to work like that, particularly in a global marketplace. For example, every year, manufacturing companies are normally asked by their leading customers to cut their prices because of the power of global competition. They therefore have to get on with delivering more for less. They cannot do that by skimping on quality; they must also improve their quality every year, otherwise competitors will do better for less.
	My unpopular point is that Members of Parliament must show that we ourselves can do what I have outlined. As I understand it, the current expenses system budgets for every Member of Parliament to have three full-time staff. I think we can do our work with two. I do not want to be unkind to current colleagues, so I believe that we should say to all new Members of Parliament that they will get an allowance for only two full-time staff. Those who are already here can carry on with three-I do not know whether you, Mr. Deputy Speaker, employ three staff, but I do not, so I know that the work can be done with fewer-but when one leaves, the Members should move on to the system of two full-time staff. That is a minimal sacrifice that we should make to show the public sector that more can be delivered for less. A Member of Parliament can do a perfectly good job with two rather than three staff, and that makes a contribution. Armed with that moral authority, we can then approach the big parts of the civil service and say, Look, this is what we're doing; this is our contribution, and now we'd like you to do something similar. We don't want you to take out one in three-perhaps one in 10-but we need to act to make an impact on this huge deficit.
	Let us consider pensions. Members of Parliament, unbeknown to the public and unbeloved by them, have already worsened the terms of our pension scheme for everybody who is here. We have to make bigger contributions and there has been some dilution of the benefits-rightly so because the costs were large and the deficit was getting out of control. We are therefore contributing to tackling the deficit. I think we need to go further, and to say to new MPs that like all private sector schemes, the MP scheme is closed to new Members. We have to work our way through our pension problem in exactly the same way that people are working their way through many private sector problems-they have realised that they are not affordable any more, and that they have to make cheaper arrangements for new staff. We are going to have to do the same in many public sector pension schemes that are far bigger and more important than the MP scheme, but it is important to do it first for that scheme, so that we lead by example and have some moral authority when we come to tackle the problem.
	There are many other ways in which we could start to curb the deficit. I have no intention of repeating speeches that I have made in the House before and of naming individual programmes and areas of work that I would like to see discontinued, such as the identity card and regional government agenda and so forth, which we could simply abolish and scrap. I am pleased to say that there are many such schemes that could be scrapped, which would start to fight the deficit.
	The issue of process is terribly important. The public sector in Britain must learn to do more for less. It must learn to raise quality every year and to cut the price every year, which is what organisations in the private sector must do year after year if they wish to be successful. It is not impossible. Indeed, one of the joys for any new Government is that they will inherit such an inefficient mess that the early improvements in efficiency will be relatively easy. It is far more difficult to take over a company that has been through 10 or 20 years of such processes because the obvious, low-hanging fruit will have been taken-as private sector people would say, the obvious inefficiencies will have been squeezed out. A new Government will have many inefficiencies to squeeze out. They will have to be bold and strong and do such things in a sensible time scale and in a way that does not disrupt the rights and loyalties of existing staff. I think that can be done, and it will begin to curb the deficit.
	This afternoon and this evening is, I am afraid, a waste of time and money. Parliament stands ready to do something serious, and the Government deliver a nonsensical Bill to bind themselves or their successor in a way that is not binding and incurs no penalties. What we need is a Government who know how to run the public sector. We need a Government who understand that the world does not owe us a living and that it is moving on rapidly. We need a Government who understand that industry and Governments elsewhere are far more efficient and smart, and far more able to do more for less. This Government seem not to understand that.
	If we do not wake up soon, we could have a currency crisis, a bond crisis and a public financing crisis. We might then have a public sector management crisis because cuts done in panic, on a big scale and too quickly, could be very damaging. If we put the processes in place now, we might start to get confidence back and we would begin to curb the deficit earlier, which is what we need to do.

Katy Clark: It is a pleasure to have the opportunity to contribute to this debate. I suspect that many of the speeches that we have heard so far will be the kind of thing that we will be hearing in debates over the coming months as we go towards the general election.
	I will not be able to support the Government in a Division on Second Reading this evening, but for very different reasons than those others have outlined. I agreed with much of what my right hon. Friend the Member for Birkenhead (Mr. Field) said. He made a powerful speech and articulated very clearly the scale of cuts that we are facing, which I do not think the British people really appreciate at the moment.
	In his helpful contribution, my right hon. Friend highlighted one powerful issue that we need to be aware of: the influence of market. The right hon. Member for Wokingham (Mr. Redwood) and a number of others on the official Opposition Benches spoke about the influence of the market on decisions that Governments will make over the coming period, but the irony, which seems to have been lost, is that the markets put us in this position-there was a failure to regulate, but a completely irresponsible approach by the free market put us in this situation. In my view, the Government had no alternative but to take the type of action that they have taken in the past two to three years. The Chancellor was correct that there was no alternative to taking banks into public ownership and bailing them out, and to the fiscal stimulus.
	One problem is that there is an over-skewing of our economy in favour of the financial sector. In Britain, much of the financial stimulus has gone towards the financial sector. Our manufacturing base has not had the type of financial injection it has had in some other countries. Perhaps they did not go through some of the experiences that we had in the 1980s and 1990s, when we saw the demise of so many traditional industries and the flourishing of the City and the financial sector. Obviously, at times, that has had benefits for us. I am not in any way trying to minimise the huge financial input that the City and the financial sector have had into this country, but they have put us in difficult situations in the recent period.
	I cannot support the Bill because of the scale of public sector cuts that will be required if it is implemented. I am simply not willing to vote to cut essential services for some of the poorest people in this country. We need to have a massive debate not only on why we got into this situation and how we ensure that it does not happen again, but on how we deal with the deficit that we face. In peacetime, Britain has never before faced such a deficit. We have only had to deal with such situations during times of war.
	I do not defend every penny that the public sector spends. Anyone with an ounce of sense realises that the public sector does not do everything in the most efficient way, and some things could be done more cheaply, although in some cases more money needs to be spent to provide a better service.

John Redwood: The hon. Lady says that she supported bank nationalisation. Does she think that it was right to put huge sums of money into very expensive subsidies to banks but not into failing industrial or retail businesses?

Katy Clark: Each situation needs to be looked at on its merits. With the banking sector, there was no alternative, because if the banks had collapsed, the economic situation would have been much worse, given that the economy depends on them. I would have welcomed greater support from the Government for the manufacturing sector, and I will support any such provision in the times to come. The retail sector is in a slightly different situation. There is a long-term argument for retaining a steel industry and other parts of the manufacturing sector, because we will rely on them in years to come. Once we lose those sectors, they will be very difficult to recreate. Those of us from the north and Scotland-the more industrialised areas-know of the proud industrial traditions of this country. We were at the forefront of manufacturing and development, but that is no longer the case in many sectors of the economy.
	The right hon. Member for Wokingham (Mr. Redwood) talked about substantial reductions in public sector jobs. If we are to follow the advice of all the Front-Bench teams, especially of the official Opposition, we will see substantial cuts in public sector employment, which will have massive economic implications, especially in those parts of the country that are more heavily reliant on public sector jobs. As has been pointed out, if jobs are lost in the private sector, tax revenue is lost and we no longer have the benefit of the production by that individual. But the same is true in the public sector. There is a huge cost to the state in the loss of employment in the public sector and, at a time when we have to be alert to the risk of growing unemployment, any solution that involves cuts in public sector jobs is a very short-term approach.
	In recent months we have had much debate about the possibility of a double-dip recession, and that is a genuine risk. It is difficult to predict when we can start to consider how to reduce the deficit, and that is one reason why I feel it would not be helpful for any Government to have the restraints in the Bill placed on them. No Government, of any political persuasion, would have been able to predict some of the economic experiences that we have had in the past three years. As a Labour MP, I do not want to see my Government constrained in that way. I want Ministers to be able to respond to events, use their judgment and do everything that they can to protect the British economy and the British people. Therefore, as a matter of principle, I am not convinced that a Bill is the most helpful approach.
	However, the real reason why I feel unable to support public spending cuts of this nature is the types of cuts that they will likely mean to some essential services. I have voted against various Government proposals that have amounted to substantial public expenditure, including Trident replacement and the identity cards scheme, and I believe that there will be a range of other Government initiatives, such as the NHS computerisation programmes, that perhaps we should look at as well.
	I am not saying that there are not areas of public spending that very legitimately we need to look at. Of course, we are currently embroiled in overseas armed conflict. I have never voted in the House on those issues because there have not been any votes since I was elected in 2005, but before I became an elected representative in this place I marched against those conflicts. We need to have a serious discussion about our society's priorities and values. My concern about the Bill is that yet again the poor will pay the price when those who have the power and run the show make mistakes. Bizarrely, over the past one and a half to two years, the debate has gone from being about the mistakes made by those running the banks to how we can most effectively and severely cut public spending, and of course it will be my constituents and those of every Member in this House who will pay the price.
	I understand the reasons for the Government's stance. However, over the coming months we must be extremely careful in our approach towards the public sector, particularly education, health and the other essential public services on which the most vulnerable in society rely. Many of those services have been fought for by individuals and communities generation after generation, and if we start down the path of closing community halls, libraries and other services, they will not come back easily. I would like injected into this debate a discussion about not just cuts, but our society's values, and we need to say very clearly that it is not those at the bottom of the heap who have got us into this mess. As we move forward, we must also say that it is our role as elected representatives to ensure that they are not the people who pay the price.

Stewart Hosie: I do not want to repeat what anyone else has said, but this is a profoundly pointless piece of legislation, because one would have imagined that the job of any Government at any time would have been to ensure fiscal responsibility and sound public finances all the time. One would not imagine that the Government would need a law to tell them to do that, and certainly not a law that will enshrine on the statute book, if it gets that far, deep and savage cuts-cuts that this Labour Government have already planned. An £800 million budget cut has already been announced for Scotland.
	Only this Government, I suspect, could be so foolish as to lay out very broad and deep public spending cuts before we have a sustained and sustainable economic recovery from the recession. Only this Government, I suspect, would carve them into stone on the statute book, at a stroke sucking out the consumption and demand that has propped up the economy in the past little while and which is almost certainly necessary to ensure a further and sustainable economic recovery.
	At its heart, the Bill is also dishonest. Although it is fundamentally about deep cuts-as I said, an £800 million cut to the Scottish budget has already been announced-the Government have refused to publish or carry out a comprehensive spending review. That means that we do not yet know the implications for every single one of the UK's spending Departments. We are therefore having this debate in a vacuum, without knowing the implications for ordinary people and ordinary services or for the economy more widely-the very point that the hon. Member for North Ayrshire and Arran (Ms Clark) made. It may be those at the bottom of the pile who will pay the price for this Government's economic failure.
	The absence of both a comprehensive spending review and an understanding of what the cuts really mean make a mockery of the explanatory notes. The hon. Member for Taunton (Mr. Browne), who speaks for the Liberals, mentioned this earlier, but paragraph 31 says:
	There are no significant financial effects of the Bill.
	He seemed to agree with that, but I disagree entirely. There are massive financial implications for every UK spending Department and, potentially, for almost every piece of public investment. There are also implications for, in the first instance, the incomes of tens of thousands or hundreds of thousands of public sector employees who will lose their jobs and, in the second instance, private sector employees, as expenditure in local communities is reduced, as the cuts begin to bite on public sector income and the spending power in local communities. There are also massive financial implications arising from the increased social protection costs as people are paid off as a direct consequence of the cuts.
	Do the Government not understand that it was only increased Government consumption-up 2.2 per cent. last year, at a time when household expenditure fell by 3.6 per cent., when total business investment was down by 22 per cent. and when gross fixed capital formation was down by 17 per cent.-that kept the economy afloat at all? Do they not understand that to begin the process of deep and savage cuts now, before the private sector has the confidence to spend and invest, and when credit for businesses and individuals remains incredibly difficult or expensive, is economically stupid? That is the economics of the madhouse. The measures-the Labour cuts-therefore not only put faltering economic recovery at risk but, as the hon. Lady said in her speech, run the risk of pushing the economy into a double-dip recession, which is something that I know the Treasury is concerned about. I am therefore at a loss to explain why they are introducing the measures today.
	As an aside, I am also at a loss to say where the Chancellor is. There were only two, very modest financial measures in the Queen's Speech: the Financial Services Bill and the Fiscal Responsibility Bill. Both are small and modest-indeed, this one really does not matter-yet the Chancellor is not even here to listen to this short debate, on one of only two financial measures in the Queen's Speech.
	Before embarking on this political dividing line of a Bill-that is all it is-this Labour Government should have learned the lessons of fairly recent history: the recessions of the 1980s and 1990s. The recessions of 1980-81 and 1990-91 lasted for five quarters. This recession has already lasted for six. The declines in GDP then were 4.7 and 2.5 per cent. respectively. This recession has already taken our GDP down by 5.9 per cent. The economy took two full years after the technical end of those earlier recessions to reach the point at which the GDP recovered to pre-recession levels. As I said earlier to the right hon. Member for Wokingham (Mr. Redwood), it took three years before unemployment stopped rising after the technical end of the recession in 1981 and two full years before it stopped rising after the technical end of the recession in 1991. In the absence of the clarity that a comprehensive spending review would give, the scale of the cuts envisaged by the Bill and the PBR run the risk of replicating, or worse, the human cost, as well as the economic danger, of the 1980s and 1990s recessions.
	I have been a critic of the deficit and the debt levels since before the recession and before the banking crisis. Going into the recession, I said that there was nothing in the tank, because our debt at that point was around £500 billion and due to rise. I want the deficit and the debt to be reduced, but there are alternatives to what the Government propose in the Bill. When the New Zealand Government introduced their Fiscal Responsibility Act 1994, they did so on the basis of five important principles. I shall go through them briefly. The first was that Government debt would be reduced to a prudent level. That principle acknowledged that the existing level of Government debt was too high-as it is here-and that the Government needed to run operating budget surpluses for a period of time to reduce the outstanding debt and the annual deficits. They talked about a prudent level, not about an arbitrary 50 per cent. cut in order to be able to afford an artificial political dividing line.
	The second principle was that, once debt was reduced to a prudent level, the New Zealand Government would seek to maintain a balanced budget on average over the medium to long term. They did not seek to do so over one economic cycle, in which the Government would change the start and end dates to make the cycle fit the numbers, or over a single Parliament. They sought to achieve their aim using an average over the medium to long term. That was very sensible. If the Government here were to adopt that principle, they would still be able to invoke counter-cyclic measures in the midst of an ongoing debt and deficit reduction programme, if we were to hit a further significant downturn. The automatic stabilisers would kick in safely, and we would have the ability to use fiscal stimulus measures, if they were required, while we stuck to a medium to long-term objective of bringing the debt and deficit down to a prudent level.
	The third principle was that the New Zealand Government would achieve and maintain a level of net worth that provided a buffer against unforeseen future factors. That principle recognised that factors other than explicit Government debt-such as public service pension liabilities or bank deposit insurance such as the asset protection scheme-have an impact on the fiscal position.
	The fourth principle was that the Government would manage fiscal risks prudently. That called for attention to be paid to all fiscal risks, such as shifts in the demographic structure of the population and off-balance sheet state guarantees. This Bill, however, is a blunt measure to camouflage risky and damaging cuts, and it says nothing about prudent financial management.
	The fifth principle was that the Government would pursue policies that were consistent with a reasonable degree of predictability in regard to the level and stability of tax rates for future years. That principle recognised the importance of tax stability for private sector planning and growth. Although this Bill is called the Fiscal Responsibility Bill, it says nothing about the important matter of tax stability.
	Whether the Bill is passed or not, we might have a Budget in the spring. On the Andrew Marr Show, the Prime Minister said that that could happen
	if it's the right time,
	which was meaningless nonsense to avoid saying yes or no. There might be a Budget in the spring, but there will be no time for a Finance Bill to consider its tax implications. There will almost certainly be an emergency Budget closer to the summer, but that will cause further uncertainty and delay. We are already seeing further tax rises, more tax changes and more tax uncertainty, all of which risk discouraging the investment that we need in order to grow the economy. Growing the economy is the real key to tackling the deficit and ending the debt, but the Bill says precisely nothing about that.
	I heard the Chancellor's rhetoric earlier, but when I looked at the Bill, I wondered whether he was talking about the same piece of legislation. I also wondered, when I heard him justifying some of the measures, whether he was on speaking terms with the Prime Minister, who said on 10 June last year that
	you cannot cut your way out of the recession.
	On 21 October, the Prime Minister said:
	The only way forward for this economy at the moment is to maintain the fiscal stimulus.-[ Official Report, 21 October 2009; Vol. 497, c. 906.]
	In  The Daily Telegraph on 25 October, he said that
	it would be suicidal to put recovery at risk by suddenly cutting.
	Then, on 28 October, he said:
	What sense does it make to withdraw the fiscal stimulus now...?-[ Official Report, 28 October 2009; Vol. 498, c. 279.]
	He is, of course, the Prime Minister of the only serious economy in the world that does not have a fiscal stimulus package any more. As recently as 2 December, he railed against those who wanted immediate and savage cuts that would prevent Britain from recovering from the recession, yet that is precisely what the Bill and the pre-Budget report will achieve. It is precisely what the noble Lord Mandelson was referring to at the Press Gallery lunch in July, when he warned of austerity for the next decade. When I hear the Chancellor and other Labour figures railing against so-called Tory austerity for a decade, I am reminded of the noble Lord Mandelson warning against Labour austerity for the next decade.  The Herald reported accurately-I was there at the lunch-that
	Lord Mandelson has raised the prospect of an age of austerity in Britain under Labour, with spending cuts... running right the way through to 2020.
	What we are seeing today is the enabling legislation to do that.
	The Government appear to be determined to risk economic recovery by withdrawing the lifeblood from the economy before we have a sustained and sustainable recovery. I believe that they will pay the price for that at the ballot box, but that will be of little comfort to the hundreds of thousands of ordinary people who will pay the real price for Labour's economic failure and this inflexible Bill.
	I want to see the deficit and the debt cut, but I want to see that done from a position of a sustained and a sustainable economic recovery. I conclude my remarks by saying that if anyone thinks that tackling the deficit and then the debt will be difficult from a position of sustained and sustainable recovery-and it will be; there will be tough choices to make-it will be absolutely impossible from a position of faltering recovery or a double-dip recession or one that will require the kind of swingeing cuts that other Members have spoken about, made in a knee-jerk and panicked way. That is something that none of us wants to see.
	I tell the Government that we will oppose the Bill today and bring forward amendments in future stages. The attempt to tackle the deficit and the debt must be done in a flexible way that protects genuine front-line services and allows the deficit and the debt actually to be reduced from a position of real growth, rather than having the whole economy butchered simply to create an idiotic dividing line between two parties in the run-up to an election that the Prime Minister does not even have the guts to call.

Andrew Pelling: I congratulate the hon. Members for North Ayrshire and Arran (Ms Clark) and for Dundee, East (Stewart Hosie) on breaking the ice on the consensus in the debate on this cold winter evening. It is important to talk about the economic implications of the Bill.
	In reality, what we have seen over the last 18 months or so has been a socialisation of the bad debts that were created on the banking books as a result of huge leverage and excess capacity within the debt markets, making it inevitable that the Government would transfer those debts into the public sector. It would have been completely irresponsible for any Government not to have acted in that way. In respect of the current Bill, however, running down that socialisation of bad debt in a compulsory fashion could lead to very significant economic damage for our country.
	The dangers of having a double-dip recession are real. My own professional experience involved spending a great deal of time working for Japanese financial companies, but the last thing I would like to see is our country suffering the 20 years of economic turpitude that that country has faced. If we take away the ability to use proper fiscal stimulation, there may well be real problems.
	There are many clouds over the economy. VAT is going to increase, for example, and internationally, US housing is still in great difficulties. Only last week, the US Government found it necessary to give another bail-out to GMAC. There are weaknesses in other economies. French consumer confidence was unexpectedly down today, while there are tremendous weaknesses among our European partners, particularly in Ireland and Spain. We must also remember that for our own economy, manufacturing production is down almost 11 per cent.-10.8 per cent.-over last year and the service economy has contracted by 4 per cent.
	In considering the Bill, we should bear in mind the tremendous fragility in our economy. Many pressures-well-meaning pressures-were exerted for banks to be required to put a significant amount of extra capital on to their books, but in the coming years that would inevitably result in continuing severe restrictions on the ability of private sector banks to give stimulative support to our economy, and in such circumstances it is important to maintain full fiscal discretion.
	There are real questions to be asked about whether quantitative easing is an appropriate tool, but there is no doubt that if we withdrew it, the need for fiscal stimulation would become ever more important. We must bear in mind just how significant the removal of credit from the economy has been as a result of the financial crisis. A substantial amount of that credit came from financial organisations that were not banks. There was a heavy reliance on short-term borrowing from the financial markets-perhaps, in the UK economy, the equivalent of £240 billion of credit stimulation. The £200 billion of heavy gilt issuance represents only one part of meeting the amount of credit creation that has been withdrawn from our economy, and a severe reduction in fiscal stimulation could lead to significant troubles for it.
	Much reference has been made to history in today's debate. Members have mentioned, for instance, the crisis that followed the post-war period. It should be remembered that the success of the recovery in Europe was the result of a considerable fiscal stimulus on the part of our United States partners in terms of the recapitalisation of Europe. Members were making false assumptions when they cited that period to justify significant reductions in fiscal spending now.
	I think that the danger of a crisis in the bond markets has been greatly exaggerated, in terms of their ability to absorb significant issuance of United Kingdom Government debt. The right hon. Member for Birkenhead (Mr. Field) recalled that in the 1980s the Swedish Finance Minister greatly resented having to come to speak to young people in the City, and to justify why people should buy Swedish debt. I was one of those young people in the 1980s, although I am less young now.
	There is no doubt that the power of the bond markets is very important. I remember a senior financial official in the Reagan Administration saying that if he were to be reincarnated he would want to be reincarnated as the bond markets, such was their influence and strength at the time. I believe that, particularly if there is a significant reduction in Government spending, banks will be keen to buy issuance from Government-they are being pushed in that direction by regulatory change-but if we move too quickly to remove fiscal stimulation, the only productive area in which banks will invest will be gilts, because the return from them will be significantly higher than that provided by other potential investments or lending in the United Kingdom economy.
	If I wanted to be particularly controversial, I would say that the UK Government's triple A rating does not really exist any longer within the capital markets, as the credit level is treated as being below that. There is a danger in us, as politicians, regarding that as absolutely totemic. This is obviously a matter of great historical departure-other than, potentially, on some war bonds, our country has never defaulted-but being rated double A-plus would not be such a severe challenge. Many other G7 countries have gone through such change.
	The hon. Member for Chichester (Mr. Tyrie) made the most pertinent point when he said that the debate is also about our credibility as politicians. Legislating to deliver a promise weakens the position of politicians because it implies, or even states, that any other promise that politicians give which is not backed by legislation is inevitably of a lower calibre. This highlights the way in which politics has become so debased that legislation comes to the House purely on the merits or demerits of making a particular point with the media.
	Unfortunately, as the hon. Member for North Ayrshire and Arran has pointed out, the type of restriction involved could be very severe in terms of public services dislocation and the lack of discretion that politicians would have in future. I cannot see the sense in both of the main political parties, which have for so long emphasised that they like the flexibility that this country enjoys because it is not part of the euro, wanting to move on and suggest that our country can do well and prosper if our politicians are straitjacketed by a restriction on their future discretion to make judgments about appropriate economic policy. In reality, if we needed, through economic policy, to have a higher rate of fiscal stimulus than that required by the tapered approach to reduction in the annual public deficit, we would probably-as has happened in the past to meet the European 3 per cent. of gross domestic product borrowing requirements-have a system of obfuscation and using different means of private finance initiative to hide real Government borrowing. As a result, we would end up further undermining our credibility as politicians. We should have the confidence to be straightforward with the electorate about the requirements of Government and about our finances.
	I agree strongly with the comments that my hon. Friend the Member for Castle Point (Bob Spink) made in an intervention on the Chancellor. It seems reasonable that the approach to politicians' pay should be the same as that in the private sector. If the Government are determined to put the Bill through Parliament, and if they think it is important, perhaps there should be performance-related payments for the Chancellor if he hits targets. Let the Bill have real bite if they think it is important. There is no point in passing legislation with no sanction or incentive of any kind for the Chancellor regarding the proposals.
	Let me address the Opposition's amendment. Initially, I decided not to support it because I think it is important that politicians should feel that they can deliver results by their actions rather than through legislation or the setting up of alternative quangos. However, I think that the amendment is written in such a way that there is sufficient flexibility to allow those of us who are not members of the Conservative parliamentary party to support it. In particular, this House would be strengthened if the opportunity were taken to set up an independent Budget office, similar to the one in Congress, to look at how the Government are performing their fiscal and debt management.
	Such a body would revitalise this place's ability to hold the Government to account about their finances. This House's inability to do that on taxation issues has been a long and unfortunate tradition in this House, although the Public Accounts Committee has done extremely well in its endeavours to look at whether Government money is well spent.
	In conclusion, this Bill will place our country and politicians in such a fiscal straitjacket that our very prosperity will be put at risk, and it is being done on a mere whim. The Government are playing to the media, and trying to create false division lines between the two main parties represented in this Chamber.

Philip Dunne: I am pleased to have an opportunity to contribute to this debate, on what is the first parliamentary day of the new decade. It is also the first parliamentary day of the final year of this Parliament and, I hope, of this Government. Change will undoubtedly come this year, in that it has to be an election year.
	As previous speakers have noted, the election is at the heart of this Bill. That observation has not been confined to politicians in this Chamber, as it has been made by outside commentators as well. In its commentary on the pre-Budget report, Goldman Sachs wrote:
	The UK press has concluded that the relatively slow pace of tightening, which doesn't begin in earnest until 2011, reflects politics more than economics-there's a general election next spring.
	We will have to wait and see whether Goldman Sachs is right about the spring, but the sentiment reflects what the Bill is all about.
	I want to add my voice to those who have spoken in the debate and declared this to be an utterly feeble Bill. The only support for it has come from those on the Government Front Bench. It is one of the thinnest pieces of legislation that I have seen since I arrived in the House nearly five years ago, and it has quite properly been ridiculed-by the shadow Chancellor in particular, but also by every speaker other than the Chancellor himself.
	No other issue is more significant, or a greater plank in the Government's own election planning, than sorting out the public finance deficit that this country faces after 13 years of Labour mismanagement. There is no bigger issue facing the country, or for voters to consider at the coming election. No difference between the Government and the Opposition is more striking than their respective approaches to dealing with this matter: the Government are clearly divided, and the Opposition are clearly united.
	We could not have illustrated that better had we, as the potential Government in waiting, planned today's debate and set out the approach to be taken by Labour Members to supporting their own Government's legislation. They have not followed that approach. I said earlier that, apart from the Chancellor's, only one speech had been made from the Labour Benches, but now there have been two. Both speakers have said, in terms and at the outset of their remarks, that for very different reasons they would not be supporting the Bill.
	There has not been a single speech in support of the Bill. That shows more clearly than we could ourselves the truth of the shadow Chancellor's allegation in his remarks that there is division at the heart of Government over how to tackle the deficit. As we have all acknowledged, I think, that is the critical issue that the country faces at present.
	So given that lack of interest, I have to ask why the Government business managers have decided to rush the Bill through the Committee stages on the Floor of the House. The obvious answer may be that they need to get the Bill through quickly to have it on the statute book ahead of a general election, which may be called in early or late spring. But that is too simplistic an answer to my question. I think the simple fact is that the Bill will not be handled in Committee, where evidence sessions could be taken, because the Government are incapable of finding anyone to call as a witness to support the Bill. The evidence sessions would merely give grist to the mill of the Government's opponents on their own Back Benches and on the Conservative Benches in pointing out what a perfectly frivolous and ludicrous piece of legislation we have before us. In short, we are not dealing so much with solutions to a credit crunch. The Government are trying to deal with solutions to a credibility crunch.
	The Government have form on the issue of fiscal stability. In his famous, or should I say infamous, Mansion House speech in 1997 the present Prime Minister, then Chancellor, set out his fiscal rules-his first attempt to provide an aura of credibility for his approach to the public finances. He said:
	We will introduce tough rules for government borrowing.
	A year later, he told us:
	I will never let the deficit get out of control. We will not spend money we have not earned.
	Well, we all know what happened to those fiscal rules. The goalposts were moved as soon as it looked like they might be missed.
	The commentators at the Institute for Fiscal Studies spelt out in their 2007 Budget briefing:
	The perception that the Chancellor has moved the goal posts and has delayed the tax raising measures and cuts in spending plans that we and other independent commentators had been saying would be necessary until after the 2005 election undermines the credibility of the fiscal framework.
	The measures were obviously dropped.
	What is the impact of that lack of credibility when it comes to dealing with the current state of the public finances? We have heard from other speakers this evening about the impact within the market. The right hon. Member for Birkenhead (Mr. Field) drew analogies with the run-up to the second world war, clearly with an eye to securing an impact in the media. The impact of the lack of credibility is extremely significant. It is not just the credit rating agencies, which have put the UK sovereign debt on informal credit watch. It is not just the market commentators, who are saying that the Bill will do nothing seriously to address the debt-to-GDP ratios, which must fall faster. The Governor of the Bank of England himself has said that the deficit needs to be reduced much faster than is proposed in the Bill.
	Apart from the commentators, the markets themselves are telling us that we are getting perilously close to an apocalyptic scenario. Let us look at the three market measures that are most regularly used to compare this country's public debt with that of our international comparators. We can see that the UK is in a perilous position. In the gilt market-which includes the impact of currency, so the measure is not the most directly relevant-the yield on medium-term gilt is up 43 basis points since 1 December 2009. There has been a similar increase in the US, yet in Germany the figure has risen by less than half over that period.
	We can look at inflation-linked bonds, which remove the differences in inflation between countries. Since 1 December 2009, UK medium-term inflation-linked bonds have risen by 23 basis points to almost 3 per cent.-2.96 per cent.-which indicates an inflation risk over the risk-free rate.

Andrew Pelling: Is some of that movement in basis points to do with the market discounting the heavy prospective issuance of debt that is coming, particularly in the US and the UK? Reference was made earlier to PIMCO, which has invested heavily in Government bonds and has taken the view that the UK and the US are particularly difficult investments at this time.

Philip Dunne: That helps to explain the differential rates in different countries. I am trying to draw out the significant increase since this Bill was first referred to in the pre-Budget report, to show that the markets have no faith in it as a means of trying to reduce the public finance black hole the country finds itself in.
	The third measure is credit default swaps, which take out the currency risk because they indicate the premium this country would have to pay should it raise debt in other currencies. Here again, the issue is stark. The UK credit default swap rate today is 83 basis points, up 12 since 1 December 2009, whereas in Germany the rate is only 26 basis points and has risen by three since 1 December. We have had an increase of four times more than that in Germany, and we have a credit default rating twice that of the United States.
	Where does that place the UK when competing for finance internationally to fund our deficit? A table helpfully produced by the House of Commons Library showing 2009 Government borrowing as a proportion of gross domestic product for OECD countries rates the UK as third worst. Only the economies of Iceland and Greece are in a more precarious position, and the country that is closest to the UK is Ireland. We have all seen what has happened to their borrowing costs and the stark action that has had to be taken by all three of those countries to bring their public finances under control. The UK sits right in the middle of that bunch.
	Quite apart from the challenges of funding the Government's spending over the coming years, given the public finance position we are in, the other significant worry is the impact the increase in rates will have on the rest of the economy-the whole private sector, whose borrowing costs are also priced off the so-called risk-free sovereign rating. There is no question but that the volume of Government debt is not allowing private sector credit spreads to contract. The simplest indicator is the continued wide spread of new mortgages. It is not the supply of credit to the household sector that is so much of a problem, but the price. The Government need to recognise that their action in failing to get to grips with the state of the public finances is spilling over and restraining growth in the private sector of the economy that they are so keen to support.
	The Government's credibility is the key to understanding whether the Bill has any prospect of achieving success. We have heard from many other speakers this evening that the Government have no credibility when it comes to forecasting either their debt levels or GDP growth. The track record for their debt forecasting was well demolished by my hon. Friend the shadow Chancellor. As he said so clearly, in every Budget or pre-Budget report from the Chancellor and his predecessor, there has been a claim for debt reduction over a four-year period-as envisaged in the Bill-yet not once has it been achieved.
	On the forecasting track record for GDP growth, the pre-Budget report assumes, first, that the economy will recover in a more dramatic fashion than we have experienced in any previous recession. Secondly, it assumes a consistency in growth rates that is unprecedented on two counts. It assumes a 3.25 per cent. increase in GDP for the four years starting next year. This is not only above the trend rate that the Government have presided over throughout the past 13 years, but it is a greater and more sustained increase than in any comparable four-year period of the Blair/Brown chancellorship. One can only assume that those forecasts were optimistic.
	My final point on the credibility of the Government in their approach to the Bill relates to their actions. The Bill does nothing to restore faith in the Government's competence in administering the economy or to restore faith in the Treasury's competence. Let us take a recent example of Treasury competence to see whether the current Treasury team are the right people to monitor the reductions in the deficit envisaged in the Bill. Let us take the issue of the bank bonuses.
	At the time of the pre-Budget report, the Government announced that they wished to get a grip on bank bonuses. Their objective, which was widely shared across the House, was to extend the period of deferral of bonuses to bank executives in particular, to ensure that they were not motivated to bet the bank's balance sheet, to put it crudely. Let us take as an example the largest financial institution over which the Government have some direct influence-the Royal Bank of Scotland, where the taxpayer is the largest shareholder.
	The Government have proposed a bonus scheme for executives at the Royal Bank of Scotland that envisages payments over a three-year period-50 per cent. in year one, 25 per cent. one year later, and 25 per cent. a year after that. That is, broadly speaking, more generous than the current market norm, where deferred bonuses are typically paid equally in three instalments, rather than loaded to year one. Leaving that criticism aside, the other issue that the Government have completely failed to take into account when considering introducing a deferral scheme to Royal Bank of Scotland is that a large proportion of the senior executives at RBS who are transacting in the markets and who are therefore eligible for bonuses are former ABN bankers-the very bank that got RBS into the perilous state that it is in.
	If we look at the bonus scheme that applied to those bankers-the current RBS executives who were formerly ABN AMRO executives-the Government's proposed bank bonus deferral scheme, far from extending the period over which they get paid their bonuses, will actually reduce it. Their scheme had a four-year deferral provision, whereas the proposed scheme has a three-year deferral. Not only have the Government introduced a more generous scheme in the one company over which they have some direct control, but they have exposed an issue in relation to the Bill-that is, what happens to a Government Minister who makes such a mess of an area for which they are responsible, such as the bank bonus deferral that I have just described?
	What sanctions apply? Will such a Minister be fired or moved on? Who knows? That is highly unlikely. In this Bill no sanctions at all are proposed in the event that one of the targets is missed. As Martin Wolf suggested in the  Financial Times to add to the ridicule of the Bill, a future Chancellor who failed to meet the targets might be sent to the tower of London. What chance of this Chancellor or the Minister accepting that as a suitable sanction in the event of failure of the Bill? Perhaps she might be able to tell us.

David Gauke: This has been a somewhat curious debate. I do not know whether there has been a precedent for such a Bill. The Bill was at the heart of the Prime Minister's party conference speech in 2009; it was the flagship economic Bill in the Queen's Speech; and it is the centrepiece of the Government's economic strategy to reduce the deficit. However, I wonder whether we have ever had such a Bill, because it has attracted not a single voice of support from Back Benchers on Second Reading.
	I suppose that the Government might have hoped that in a time of crisis the country would unite around them as they set out to address the problem, but as it happens the Bill has managed to unite the House in opposition. The fact is that we have had only two contributions from Labour Back Benchers in the debate. I do not know where the rest of the parliamentary Labour party are tonight-they may be plotting, once again, if the rumours that have been reported this evening are true-but not one Labour Back Bencher could be prevailed upon to speak in support of the Bill.
	Instead, we have had from Back Benchers a series of critical contributions. The right hon. Member for Birkenhead (Mr. Field) and his hon. Friend the Member for North Ayrshire and Arran (Ms Clark) took somewhat different perspectives on the Bill, but they both opposed it. The hon. Member for Dundee, East (Stewart Hosie) from the Scottish nationalists, the hon. Member for Croydon, Central (Mr. Pelling) from the independents, my right hon. Friend the Member for Wokingham (Mr. Redwood) and my hon. Friends the Members for Chichester (Mr. Tyrie) and for Ludlow (Mr. Dunne) were all critical, too. Almost any speaker this evening could have uttered the words that we have heard used to describe the Bill, including profoundly pointless, frivolous, a political prank, an expensive press release or mere words, but we have not heard any words of support for the Bill.
	Let us imagine the scene in the Treasury last year as preparations were made for the pre-Budget report. The public finances are in ruins and we are borrowing more than at any time in our peacetime history. For every £4 spent by the Government, £1 is borrowed. We are borrowing more than any other G20 country. The CBI, the International Monetary Fund, the OECD and the Governor of the Bank of England are all calling for a credible plan to reduce the deficit. The credit rating agencies have started to express their concerns about the UK's triple A rating, and the risks of failing to set out a credible plan are becoming clear in the markets, as my hon. Friend the Member for Ludlow so clearly set out. We even have the example of Greece, one of two OECD countries borrowing more than the UK, where confidence has been lost and it costs them an extra 2.5 per cent. on interest rates to clear Government debt. It is plain that without a credible plan, mortgage rates may go up and businesses will find credit hard to secure.
	The challenge that the Treasury faced at the time of the PBR was to restore fiscal credibility, and what did we get-a clear acknowledgement of the scale of the crisis, details of departmental spending in the years ahead, a general sense of direction on how the deficit would be reduced, or even just policies to improve the dismal and discredited forecasting record of the Treasury? No, we got this Bill: a Bill that sets out targets but no enforcement mechanism-no sanctions if they are breached. That is not a credible response; it is a distraction policy.

John Redwood: Has my hon. Friend noticed that neither Labour Back Bencher who spoke in the debate has returned to the Chamber for the winding-up speeches as is traditional? Does he share my concern that the Labour Whips may be dealing with them at the moment-trying to re-educate them?

David Gauke: I am grateful for that intervention. I look forward to reading on tomorrow's blogs reports of the mobile phone conversation in which the Government's Chief Whip explains exactly what he is going to do. I believe that he has a habit of making such phone calls on trains.
	This Bill is a distraction policy. The idea that the existence of a target somehow provides credibility in itself is ridiculous, even if it is a target devised by the people who brought us, and broke, the golden rule. I suppose that we should be grateful that there is some acknowledgement of the credibility problem, given that the Prime Minister is currently going through one of his bouts of total denial as to the need to address public spending in this area, but that is very little comfort.
	Let us not ignore the intellectual confusion at the heart of the Bill, which has been brought out by several speakers, including my right hon. Friend the Member for Wokingham and the hon. Member for North Ayrshire and Arran-we hope that she is safe. It is not often, I suspect, that those two Members agree on much. Nevertheless, the point has to be made.
	In the past couple of years, the Government have argued that nothing could be done to reduce the deficit until the recovery was well under way; that notwithstanding the record levels of borrowing, fiscal policy could continue to be used to counteract the recession; and that it was appropriate to have a discretionary fiscal stimulus through a temporary cut in VAT. Now, however, we have a Bill that means that from 2011 to 2016 borrowing must fall year in, year out, regardless of the economic circumstances and where we are in the economic cycle. Never mind the discretionary fiscal stimulus-this could preclude even the use of the automatic stabilisers, as my right hon. Friend the Member for Wokingham pointed out. Does that mean that the Government now believe that we have borrowed so much, and will continue to do so; that we do not have room for manoeuvre; and that once we are through a general election the fiscal levers will not be available for at least six years?

William Cash: Does my hon. Friend recognise the problem that I have presented to my right hon. Friend the Member for Wokingham (Mr. Redwood) and my hon. Friend the Member for Braintree (Mr. Newmark)? All three of us have argued for a long time that the Government's figures on net debt are simply not true. They are not giving the real picture to the British people, and they are not even giving the picture that the Office for National Statistics has given.

David Gauke: My hon. Friend raises an important point. One of the benefits of an office for budget responsibility would be that we could provide some credibility in exactly that area.
	If, as the Bill implies, it will not be possible to use the fiscal levers from 2011 to 2016, that would appear to signal the complete collapse of the Government's position, which is that fiscal levers are a very important element of what a Government can do. One might ask why the born-again Keynesians on the Labour Benches will be walking through the Lobby in support of the Bill given that that is what it says, as they would know if they actually read it. To be fair to the hon. Member for North Ayrshire and Arran, she has read the Bill and she will not be walking through that Lobby; I wonder whether many of her colleagues will be joining her.
	Alternatively, perhaps, as ever with Labour Governments, fiscal discipline will be there for as long as it is absolutely expedient, as in the case of the abandoning of the fiscal rules at the point at which they prove to be a constraint. The Chancellor gave us the answer earlier today when he stated that if there were a recession and difficulties in the economy, the Chancellor would simply have to come back and explain to us that the target was not going to be met. If that is really the case, then we have to ask what on earth is the point of the Bill.
	If the Government genuinely wanted to increase the institutional pressures to reduce the deficit, they could have followed our policy and established an office for budget responsibility that could publish its own fiscal forecasts. We have heard several times today about the Treasury's failures in its own fiscal forecasts. It could make recommendations as to whether the Government would meet their stated objectives in reducing the deficit or whether further action was necessary, and of course it could be a much more sophisticated instrument than the targets set out in the Bill. As my hon. Friend the Member for Stone (Mr. Cash) pointed out, the difficulties that exist and the use of the private finance initiative and other off-balance-sheet mechanisms have done little for the Government's credibility in this area.
	Truth be told, whatever the Government propose at this stage, there is nothing that they can do to restore their credibility. This Government are to fiscal responsibility what Tiger Woods is to marital fidelity. The Chancellor had his chance to set out a credible path to fiscal responsibility-indeed, we read the leaks suggesting that he fought to put forward proposals that would have delivered something close to credibility-but the man whom we thought was unsackable was still too weak to stand up to the Prime Minister and the Schools Secretary, and yet again we had a pre-Budget report that did nothing to address the Government's lack of credibility.
	The Chancellor could have set out spending plans that would have reassured the markets, and in doing so perhaps protected his own legacy, but he failed to do so. Instead we have this pathetic excuse for a Bill. As the right hon. Member for Norwich, South (Mr. Clarke) has pointed out, it is vacuous and irrelevant. At a time of crisis in the public finances, we need leadership that will rise to the occasion. We need a man with a plan, not a man with a stunt. If the UK is to have fiscal credibility again, there is one necessary condition. It is not this Bill, it is a change of Government.

Sarah McCarthy-Fry: In 1997 the Government established two clear fiscal objectives, which have been maintained since and will remain in place. The first is, over the medium term, to ensure sound public finances and ensure that spending and taxation have a fair impact within and between generations. The second is, over the short term, to support monetary policy to help smooth the path of the economy.
	The financial crisis and the global recession have had a profound impact on the public finances, resulting in a significant increase in Government borrowing and, as a result, increasing public sector net debt. Those major economic shocks have hit every country in the world, and we have had to be flexible in our response to changing circumstances. As my right hon. Friend the Chancellor set out, our first priority was to provide support to the economy, which is why the Government undertook a fiscal stimulus to provide support when the economy was weakened. That stimulus and the effect of the automatic stabilisers are providing fiscal support totalling about 5 per cent. of GDP this financial year, which has helped limit the severity of the downturn and its impact on businesses and individuals.
	The Government estimate that as a direct result of the fiscal stimulus announced in the 2008 pre-Budget report, GDP growth in 2009 will be about half a percentage point higher than it would otherwise have been. There were costs to stepping in, but not to have intervened would have been even more costly and burdened the economy over a much longer horizon. We have always been clear that the initial support must be followed by steps to secure sound public finances. Our fiscal stimulus was deliberately time-limited to increase its impact during the downturn and ensure sound public finances over the medium term.
	Timing is all, and much of today's debate has centred around the timing of the consolidation. There have been contributions from my right hon. Friend the Member for Birkenhead (Mr. Field), the hon. Member for Chichester (Mr. Tyrie), the right hon. Member for Wokingham (Mr. Redwood), my hon. Friend the Member for North Ayrshire and Arran (Ms Clark) and the hon. Members for Dundee, East (Stewart Hosie), for Croydon, Central (Mr. Pelling) and for Ludlow (Mr. Dunne). Some hon. Members complained that we were not going fast enough, and others that we were going too fast.

David Gauke: As the Exchequer Secretary runs through the various contributions to the debate, can she recall any other occasion on which the flagship measure in the Queen's Speech has not attracted a single voice of support from the Government Back Benches?

Sarah McCarthy-Fry: I cannot speak for Back Benchers who may not have been able to get here in time to speak in the debate.  [Interruption.] The proof of the parliamentary Labour party's support will be in the votes for the measure.
	The Government will not withdraw support too quickly. Tightening fiscal policy too quickly risks jeopardising the recovery, which would result in the deterioration of the fiscal position. The Government will therefore ensure that fiscal policy continues to provide support to businesses and individuals in the early stages of recovery.

John Redwood: Why have countries, which borrowed much less and ran a much tighter ship, recovered much sooner?

Sarah McCarthy-Fry: We must look at things in a wider context. We should remember that unemployment in this country is not as high as in other countries. We must examine all the factors.
	When the economy is better placed to support a more rapid tightening, fiscal policy will shift towards consolidation. Well-timed and planned fiscal consolidation will support economic growth during the recovery. In line with fiscal objectives, the Government's fiscal strategy is threefold.
	First, we will base policy decisions on a realistic fiscal forecast, based on a range of assumptions, some of which are designed to provide caution for uncertainty. Secondly, we will ensure that the fiscal policy framework is set to deliver the Government's fiscal policy objectives. To that end, the Government have introduced the Bill. Thirdly, we will set out a credible plan to deliver sustained consolidation in the medium term to ensure sound public finances in a time frame that is consistent with economic recovery and growth. In line with that, the pre-Budget report outlines plans to more than halve the deficit in four years, and the fiscal consolidation plan included in the Bill embeds the deficit reduction. That is the sharpest reduction in the budget deficit of any G7 country.

Graham Stuart: I sympathise with the Exchequer Secretary's plight this evening. She says that the Government aim to have a credible policy. How credible can it be when a heavily whipped parliamentary Labour party cannot produce one Back Bencher to speak in favour of it? No wonder the Chancellor is desperately whispering in her ear. It is a night of humiliation for him and for the Government.

Sarah McCarthy-Fry: I have no need of sympathy from the hon. Gentleman.
	As the economy emerges from recession, and exceptional uncertainty recedes, the Government believe that it is appropriate to strengthen the fiscal framework. That will support the recovery and is in line with international action. As Governments around the world work together in response to the downturn, many other countries are now choosing to strengthen their fiscal frameworks. Indeed, the International Monetary Fund has highlighted fiscal responsibility laws as a way in which to buttress fiscal adjustment following the financial crisis by strengthening institutional arrangements. The Government have chosen to enhance the fiscal framework through the Bill. The measure will help businesses and investors make long-term plans with confidence about the future fiscal position and the financing environment.

Stewart Hosie: The position has been buttressed globally, but which other G7 country has withdrawn its fiscal stimulus package?

Sarah McCarthy-Fry: We are not immediately withdrawing our fiscal stimulus package-I am sure that that will be debated further in the pre-Budget report debate on Thursday.

Philip Dunne: Will the Exchequer Secretary give way?

Sarah McCarthy-Fry: I want to make some progress, then perhaps I shall give way if there is time.
	The Government have set out measures to reduce borrowing by £57 billion by 2013-14 and to contribute to more than halving the deficit over four years. The Bill embeds the deficit reduction in legislation and also sets further targets to reduce the deficit in each year to 2015-16 and to have the national debt falling in that year.

David Gauke: Will the Minister explain what would happen if she were in government in 2012 or 2013 and there were a recession? Would the target of reducing borrowing year in year out, as set out in the Bill, still apply? Is that the Government's position?

Sarah McCarthy-Fry: I cannot remember whether the hon. Gentleman was here for the Chancellor's opening speech, but he dealt with that point quite closely- [ Interruption. ] I will repeat it if the hon. Gentleman wants me to. If there were an unprecedented situation, the matter could be looked at again, but we are setting out a plan for a reduction in the deficit and further targets to reduce the deficit in each year.
	The plans contribute to ensuring sustainable public finances in the medium term, and I do not think that placing them on the statute book is a distraction. Legislation provides certainty and stability, and we are giving Parliament a new role in both setting and monitoring the Government's fiscal plans. In particular, Parliament must approve fiscal plans before they become law, which is a significant evolution of the extent to which the Government are held to account for their medium-term fiscal policy.

William Cash: In view of the tremendous certainty that the Minister is describing, will she tell us now what net debt means under the Bill?

Sarah McCarthy-Fry: I was going to come to that later in my speech, but given the number of interventions, I might not get there. The legislation requires explanation of key terms to be set out in the code for fiscal stability. The Chancellor has stated that that will be published in draft in advance of Committee to allow for scrutiny. All definitions and fiscal aggregates used in the Bill will be national statistics, produced by the independent ONS, using European and internationally accepted methodologies.

Several hon. Members: rose -

Sarah McCarthy-Fry: I am not going to give way because if I do, I will not get to the end of my speech.
	The International Monetary Fund has set out that the strengthening of medium-term frameworks, including through fiscal responsibility laws, should help to support the fiscal adjustment that will be necessary in most economies following the financial crisis. The Bill is therefore a crucial part of our fiscal strategy, binding the Government to deliver on the tough decisions we are taking to more than halve the deficit over four years and to get debt falling.
	The Bill builds on, and significantly enhances, the existing legislative underpinnings of the fiscal framework. It requires the Government to set out at all times a legislative fiscal plan for delivering sound public finances. That must be approved by Parliament before it becomes law, and the Bill places a binding duty on the Government to meet the plan.

Jeremy Browne: Given that less than two years ago the Chancellor forecast that the deficit this financial year would be £38 billion, and that instead it has turned out to be £178 billion, why is the Minister so confident that her right hon. Friend is able to predict what the economic circumstances will be in 2016?

Sarah McCarthy-Fry: Maybe the hon. Gentleman missed it, but there has been a global economic crisis since then.
	Fiscal plans cannot be changed except with the approval of Parliament through new legislation. That demonstrates the Government's commitment to delivering consolidation-

Jeremy Browne: The Chancellor might be the leader of the Lib Dems by then.

Sarah McCarthy-Fry: I think that that is the most unlikely thing in the world.
	The fact that the fiscal plans cannot be changed except with the approval of Parliament through new legislation also demonstrates the importance the Government place on action to ensure sound public finances in the medium term. The Bill makes the Government accountable to Parliament for meeting their fiscal plans and creates a new scrutinising role for Parliament in relation to both progress towards and compliance with them. That is a significant evolution of the extent to which the Government are held to account for their medium-term fiscal policy. Parliament is the right body to hold the Government to account for their plans for tax, spending and borrowing.
	The Government are required to account to Parliament through regular progress and compliance reports, which will be produced alongside Budgets and pre-Budget reports. Progress reports must set out the progress that has been made towards compliance with the plans. If targets are not met, the Treasury must set out for Parliament why not. The revised code for fiscal stability will set out that the Treasury must also report on what it will do to remedy the situation if targets are not met. These measures represent a significant evolution of the extent to which the Government are held to account for their medium-term fiscal policy.
	As the Chancellor noted, the Government do not consider that an office for budget responsibility-as proposed by the Opposition-is the right solution to the challenge we face. Establishing a new quango would not enhance the fiscal framework. Instead, it would risk undermining the role of Parliament in scrutinising the Government's fiscal plans. Introducing blurred lines of responsibility for forecast and policy-making functions risks damaging accountability: policy-makers would be acting on forecasts for which they were not fully responsible. It is Parliament and Parliament alone that is best placed to hold the Government to account for their plans. They should have ultimate say in matters of tax, spending and borrowing.
	Further, evidence does not suggest that outsourcing the forecast would improve its accuracy. The Treasury's fiscal forecasts since 1997 have been marginally more accurate than the forecasts for the UK made by many independent international organisations, such as the OECD, the IMF and the European Commission, and no more or less cautious than the range.
	Instead, the Government's approach is to strengthen the existing fiscal framework and enhance accountability to Parliament rather than outsource it to an external body. Parliamentary scrutiny has been bolstered by the steps the Government have taken since 1997 to improve fiscal transparency. In addition, the independent National Audit Office will retain its existing role in auditing key forecasting assumptions.
	Parliament should have the ultimate say in matters of tax, spending and borrowing. The Bill will give Parliament a new role in holding the Government to account for their medium-term fiscal policy and meeting the targets of the fiscal consolidation plan. The legislation includes clear targets, and will create a transparent reporting process for assessing progress and compliance against fiscal plans. If the Government are not on track it will be obvious, and if plans are not achieved the Government will have to set out why not.
	The Government have made it clear that reducing spending accounts for two thirds of the action the Government are taking to reduce the deficit following the crisis-measures that will reduce the deficit by £57 billion in 2013-14. This is shared between current and capital spending. Specific savings that we have already set out include £12 billion of savings from the smarter government reforms to the public sector; £4.5 billion from slowing increases in public sector pay and pensions; and £5 billion from cuts to lower priority programmes, as well other efficiencies across all Departments, where £10 billion value-for-money savings have been found already.
	The Government have already set out clear plans for fiscal consolidation. In April in the Budget, my right hon. Friend the Chancellor set out plans for consolidation and the recent pre-Budget report confirms these. These plans include more than halving the deficit in four years. The Bill enshrines these plans in law, through the Government's first fiscal plan, the fiscal consolidation plan.
	The Government are committed to sound public finances and have set out clear plans for consolidation. We will not withdraw support too quickly and jeopardise recovery. The annual pace of consolidation set out in the 2009 pre-Budget report is faster than the pace of deficit reduction forecast by the IMF for all other G7 economies in the period up to 2014. Further, the Government will return with legislative targets beyond 2015-16 at an appropriate time. The pre-Budget report projects that the deficit on the cyclically adjusted current budget will be eliminated by 2017-18.
	We are now at the turning point in the global recession and at a time when we need to start building and planning for the future. As growth picks up, we must ensure that we have sustainable public finances. Through enhancing the fiscal framework, the Fiscal Responsibility Bill will support that task. I commend the Bill to the House.

Question put, That the amendment be made.
	 The House divided: Ayes 182, Noes 280.

Question accordingly negatived.
	 Question put forthwith (Standing Order No. 62(2)), That the Bill be now read a Second time.
	 The House divided: Ayes 265, Noes 196.

Question accordingly agreed to.
	 Bill read a Second time.

FISCAL RESPONSIBILITY BILL (PROGRAMME)

Motion made, and Question put forthwith, (Standing Order No. 83A (7) ),
	That the following provisions shall apply to the Fiscal Responsibility Bill:
	 Committal
	1. The Bill shall be committed to a Committee of the whole House.
	 Committee, consideration and Third Reading
	2. Proceedings in Committee, any proceedings on consideration and proceedings on Third Reading shall be completed at one day's sitting.
	3. Proceedings in Committee and any proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
	4. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
	5. Standing Order No. 83B (Programming committees) shall not apply to the proceedings on the Bill in Committee and on consideration and Third Reading .-(Steve McCabe.)
	 The House divided: Ayes 254, Noes 187.

Question accordingly agreed to.

Business without Debate

deferred divisions

Motion made, and Question put forthwith (Standing Order No. 41A (3)),
	That, at this day's sitting, Standing Order No. 41A (Deferred divisions) shall not apply to the motion in the name of Secretary Alan Johnson relating to Immigration.-( Steve McCabe.)
	 Question agreed to.

CORPORATION TAX BILL

Motion made, and Question put forthwith (Standing Order No. 90 (5)), That the Bill be now read a Second time.
	 Question agreed to.
	 Bill accordingly read a Second time; to stand committed to the Joint Committee on Tax Law Rewrite Bills (Order, 26 November 2009, and Standing Order No. 60(6)).

CORPORATION TAX BILL (WAYS AND MEANS)

Motion made, and Question put forthwith (Standing Order No. 52 (1) (a),
	That, for the purposes of any Act resulting from the Corporation Tax Bill, it is expedient to authorise any incidental or consequential charges to tax which may arise from any of the provisions of the Act.-(  Steve McCabe.)
	 Question agreed to.

TAXATION (INTERNATIONAL AND OTHER PROVISIONS) BILL

Motion made, and Question put forthwith (Standing Order No. 90 (5)), That the Bill be now read a Second time.
	 Question agreed to.
	 Bill accordingly read a Second time; to stand committed to the Joint Committee on Tax Law Rewrite Bills (Order, 26 November 2009, and Standing Order No. 60(6)).

TAXATION (INTERNATIONAL AND OTHER PROVISIONS) BILL (WAYS AND MEANS)

Motion made, and Question put forthwith (Standing Order No. 52 (1) (a)),
	That, for the purposes of any Act resulting from the Taxation (International and Other Provisions) Bill, it is expedient to authorise any incidental or consequential charges to tax which may arise from any of the provisions of the Act.-( Steve McCabe. )
	 Question agreed to.

Mr. Speaker: With the leave of the House, I suggest that we take motions 7 to 12 together.

Hon. Members: Object.

Mr. Speaker: Objection taken. We will put them individually.

DELEGATED LEGISLATION

Motion made, and Question put forthwith (Standing Order No. 118 (6),

Criminal Law

That the draft Crime (International Co-operation) Act 2003 (Designation of Participating Countries) (England, Wales and Northern Ireland) (No. 3) Order 2009, which was laid before this House on 4 November, in the previous Session of Parliament, be approved.-( Steve McCabe.)
	 Question agreed to.
	 Motion made, and Question put forthwith (Standing Order No. 118 (6)),

Tribunals and Inquiries

That the draft Amendment to Schedule 6 to the Tribunals, Courts and Enforcement Act 2007 Order 2009, which was laid before this House on 20 October, in the previous Session of Parliament, be approved.-( Steve McCabe.)
	 Motion made, and Question put forthwith (Standing Order No. 118 (6)),

Tribunals and Inquiries

That the draft Transfer of Functions of the Asylum and Immigration Tribunal Order 2009, which was laid before this House on 20 October, in the previous Session of Parliament, be approved.-( Steve McCabe. )
	 Motion made, and Question put forthwith (Standing Order No. 118 (6)),

Tribunals and Inquiries

That the draft Transfer of Tribunal Functions Order 2009, which was laid before this House on 20 October, in the previous Session of Parliament, be approved.- (  Steve McCabe.)
	 Question agreed to.
	 Motion made, and Question put forthwith (Standing Order No. 118 (6)),

European Communities

That the draft European Communities (Definition of Treaties) (1996 Hague Convention on Protection of Children etc.) Order 2009, which was laid before this House on 11 November, in the previous Session of Parliament, be approved. -(Steve McCabe.)
	 Question agreed to.
	 Motion made, and Question put forthwith (Standing Order No. 118 (6)),

Banks and Banking

That the draft Banking Act 2009 (Exclusion of Insurers) Order 2009, which was laid before this House on 10 November, in the previous Session of Parliament, be approved. -(Steve McCabe.)
	 Question agreed to.
	 Motion made, and Question put forthwith (Standing Order No. 118 (6)),

Immigration

That the draft Immigration (Biometric Registration) (Amendment No. 2) Regulations 2009, which were laid before this House on 25 November, be approved. -(Steve McCabe.)
	 The House divided: Ayes 243, Noes 42.

Question accordingly agreed to.

REGULATORY REFORM

Motion made, and Question put forthwith (Standing Order No. 18(1) ) ,
	That the draft Legislative Reform (Insolvency) (Miscellaneous Provisions) Order 2009, which was laid before this House on 29 October, in the previous Session of Parliament, be approved. -(Steve McCabe.)
	 Question agreed to.

HOUSE OF COMMONS MEMBERS' FUND

Motion made, and Question put forthwith ( Standing Order No. 118 (6) and Order, 23 November),
	That, pursuant to section 4(4) of the House of Commons Members' Fund Act 1948 and section 1(4) of the House of Commons Members' Fund Act 1957, in the year commencing 1 October 2009 there be appropriated for the purposes of section 4 of the House of Commons Members' Fund Act 1948:
	(1) The whole of the sums deducted or set aside in that year under section 1(3) of the House of Commons Members' Fund Act 1939 from the salaries of Members of the House of Commons; and
	(2) The whole of the Treasury contribution to the Fund.  -(Steve McCabe.)
	 Question agreed to.

EUROPEAN UNION DOCUMENTS

Motion made, and Question put forthwith (Standing Order No. 119 (1),

Gas Security

That this House takes note of European Union Document No. 11892/09, draft Regulation concerning measures to safeguard security of gas supply; notes the Government's position on this proposal and agrees the broad aim of the Regulation that seeks enhanced EU resilience to supply shocks through robust preventative and emergency planning and strong emphasis on the role of a well-functioning internal gas market as the best insurance for security of gas supply; and further notes the need to ensure that the powers of the Commission in this Regulation satisfy the principles of subsidiarity and proportionality and supports the Government's aim of securing this. -(Steve McCabe.)
	 Question agreed to.

SITTINGS OF THE HOUSE

Motion made,
	That-
	(1) Standing Order No. 14 (Arrangement of public business) shall have effect for this Session with the following modifications, namely:
	In paragraph (4) the word 'eight' shall be substituted for the word 'thirteen' in line 42 and in paragraph (5) the word 'fifth' shall be substituted for the word 'eighth' in line 44;
	(2) Standing Order No. 90 (Second reading committees) shall have effect for this Session with the following modification, namely:
	In paragraph (2) the word 'fifth' shall be substituted for the word 'eighth' in line 21;
	and
	(3) Private Members' Bills shall have precedence over Government business on 29 January; 5 and 26 February; 5 and 12 March; 23 and 30 April; and 7 May.-( Steve McCabe.)

Hon. Members: Object.

PETITION
	  
	Car Scheme (Castle Point)

Bob Spink: Rene Begley, the co-chairman of New Thundersley Townswomen's Guild, has kindly organised this petition.
	Our communities are enriched and strengthened by volunteers who work in excellent schemes such as the Castle Point social car scheme. I warmly congratulate all the caring people involved in that scheme, which helps vulnerable people. Each councillor is individually responsible for ensuring that frail people are able to remain in their homes and to have help with their mobility. The public will hold councillors personally to account for trying to cut the car scheme's funding without proper consultation with its organisers and with no consultation at all with the public or users of the scheme.
	The petition states:
	The Petition of the New Thundersley Afternoon Townswomen's Guild, the residents of Castle Point and others,
	Declares that they object to the proposed reduction in funding for the Castle Point Car Scheme buses, to take effect from January 2010, that this reduction in funding will impact upon frail, elderly and infirm residents who rely on the buses as a means of independent living, and that public transport such as the Car Scheme offers a cheaper and greener alternative to private transport.
	The Petitioners therefore request that the House of Commons urges the Government to press Castle Point Borough Council, and all Councillors, to reverse the decision to reduce funding for the Castle Point Car Scheme, and to increase support for local, greener transport schemes.
	And the Petitioners remain, etc.
	[P000691]

SOUTHEND-ON-SEA

Motion made, and Question proposed, That this House do now adjourn. -(Steve McCabe.)

David Amess: My hon. Friend the Member for Rochford and Southend, East (James Duddridge) has the honour to represent the town of Southend-on-Sea, which I can say without fear of contradiction is the finest seaside resort along the Thames estuary. In its heyday, going back to Victorian times, it was enjoyed by east-enders, not only for day trips but to spend long weekends there. Sadly, in 2010, British holidays are not quite as popular as they used to be, primarily because the cost of air travel is greatly reduced and we often cannot entirely rely on our climate.
	Southend is probably no different from any other coastal resort in having fewer people in jobs, higher levels of benefit claimants, and more people in poor health and with worse transport links than their inland counterparts. That is very common among coastal resorts. However, Southend is trying to re-establish itself as an attractive and vibrant seaside town for visitors and residents alike, and it is blessed with superb leadership from Councillor Nigel Holdcroft, who is the council leader, ably supported by his deputy John Lamb. We also have an excellent council chief executive, Rob Tinlin, who is supported by a superb team of officers.
	We are perhaps not quite in the strong funding position that we would have hoped for, because the last census was somewhat lacking in rigour. The Minister will understand that we intend to ensure that the next census is absolutely accurate, because the last one basically left off 20,000 people, which was very damaging in funding terms. However, I am delighted to say that a £25 million investment package will mean four new regeneration schemes. One is City beach on Marine parade, in my hon. Friend's constituency, which will be launched on 7 January.
	Congestion and weak transport infrastructure are challenges for the town, and the other three key development projects will significantly reduce congestion and journey times. Work on the Victoria gateway, again in my hon. Friend's constituency, will start in March. The other two projects are in my constituency. One of the worst bottlenecks in the town is at Cuckoo corner, where £5 million improvement works will begin in April. It is hoped that when the improvements are completed, there will be a reduction from the 400 minutes a day of congestion that is experienced at peak times. The final piece of work, which will be started shortly, is at Progress road, a key section of the main arterial route into Southend. Those are positive schemes that my hon. Friend and I welcome, but there are further bottlenecks at the Bell and Kent Elms junctions with the A127, and I hope that in due course there will be some improvements.
	The Minister will be only too well aware of the expansion of Southend airport. Most residents welcome the fact that there is an airport in Southend, but since its current owner, Stobart, put in plans to expand it, there has been some debate in the town about the benefits of the suggestion. I believe that the council will examine the proposals on 20 January. For my own part, I feel that to satisfy all residents' concerns there should be a public inquiry, but I know that the Minister cannot say anything about that and that it is a matter for the Secretary of State at the end of the day.
	The council has invested £5 million in the third phase of improvements to the A13, which is one of the town's main arteries and is also subject to bad congestion. Although Government funding was received for the first and second phases, for which we were very grateful, nothing was provided for the third phase, which covers the area from the entrance boundary with Essex to a third of the way into the town centre.
	I should tell the Minister that the decision not to extend the c2c and National Express contracts on our two rail links is creating uncertainty, particularly as there are negotiations under way with c2c and Network Rail regarding parking and redevelopment. I would be grateful if he had a word with his colleagues about the delay in that.
	I am delighted to tell the House that throughout the summer, Southend enjoyed a relatively high level of tourism, and the local authority produced an attractive programme of events for tourists to enjoy.
	I had the privilege of chairing proceedings on the London Olympic Games and Paralympic Games Bill, and I am a keen supporter of the games. Southend is bidding to become the United Kingdom's capital of culture for 2013, and several projects are under way that can only help the overall regeneration of the town. The international arts organisation, Metal, has come to Southend having renovated the grade II listed building, Chalkwell hall. I attended its launch at the end of September. It was a great occasion and a celebration of the town. Many events were held there, and that has done a great deal to boost morale.
	We hope that, in the longer term, Metal will encourage creative businesses to set up in the town, helping us to become a regional centre for the creative industries. I was delighted that, before Christmas, the Heritage Lottery Fund awarded Prittlewell Priory museum a grant of £1.3 million. The grant will fund repairs and refurbishment, as well as creating new displays and a new external building, thus creating even more space for new displays. The project will also add new signage, trails and publications to connect Prittlewell priory with the surrounding area and landscape. The refurbished museum will tell the story of the priory from its monastic days to its life as a Victorian house, as well as that of the wildlife of the park. In addition to Southend council, the Friends of Southend Museums and the Cory Environmental Trust have pledged sums to match fund the lottery grant. That is all good news.
	We are delighted that Hadleigh, which is close to my constituency, will be a venue for the 2012 Olympic mountain bike events. In addition, many venues locally would make an ideal base for hosting teams from smaller visiting nations. For example, I recently had the privilege of opening Eastwood school's new, wonderful, first-class sports complex. That would be an ideal site for one of the smaller nations to use as a base camp.
	There will be a state-of-the-art swimming facility and a world-class Olympic-sized diving facility at Garon park. The council has invested £14 million to ensure that Southend residents, as well as visiting teams in training for the 2012 Olympics, can enjoy the facilities. In addition, other key swimming facilities in the town at Belfairs and Shoebury in my hon. Friend's constituency will be refurbished. I know that I speak for all local residents when I say that we are looking forward to the Olympic games. We certainly intend to ensure that Southend is at the heart of the celebrations.
	Given Southend's waning popularity as a destination for weekend visitors, we have tried to direct its energy towards the twin activities of becoming the centre of culture for the east and becoming a centre of learning. We have a wonderful college, which has joined forces with the university of Essex under the excellent leadership of the principal, Jan Hodges. It was opened in 2007, and we have a marvellous campus, with performing arts, a business school and health and human sciences. Recently, we joined forces with Basildon and Thurrock. We welcome the fact that Southend is the lead in the partnership, but are somewhat disappointed that there does not seem to be funding for a single campus for South Essex college. Until there is additional funding, we will have a split-site campus, which is not ideal.
	The Minister knows only too well that Southend has suffered a blow through job losses. HSBC has closed its card-processing facility, and 750 local jobs have been lost. I know that I speak for my hon. Friend when I say that we are concerned about the rumours of further job losses at Her Majesty's Revenue and Customs site in the town-the numbers working there have already been reduced. Further losses would certainly be unwelcome.
	Finally, the pier regeneration is very important. As the Minister knows, Southend pier is the longest in the world and the town is famous for it. We were very disappointed recently about it. We had been given the impression that we were to be given funds to develop and restore the pier given that it has had three fires, and we invested £36,000 on a design competition because we were encouraged to do so by the Commission for Architecture and the Built Environment, but unfortunately our bid was unsuccessful. The Department for Culture, Media and Sport announced only £5 million of major projects when it was expected that there would be £15 million. Was that why the decision was delayed by four months?
	About two years ago, a DCMS Minister was good enough to give us money to help deal with the cliff slippage that we suffered in Southend. The Department for Transport provided £1 million in the last financial year for emergency stabilisation in the west of Southend in Belton Hills and by Leigh railway station. Any further support the Government could give would be very welcome.
	In conclusion, we are very grateful indeed for the help that has been given thus far for the regeneration of Southend, but any further help would be very much welcome.

James Duddridge: I congratulate my hon. Friend the Member for Southend, West (Mr. Amess) on securing this debate and look forward to the Minister's reply, given that he recently enjoyed a visit to Southend and the surrounding area. I ask three things of him: to count correctly, to fund directly, and to get the infrastructure right.
	Counting correctly relates to the census. The failure to count 20,000 people in the 2001 census costs Southend £7 million each year, so counting correctly is the most fundamental single thing the Minister could review when considering the future prosperity and regeneration of Southend.
	Secondly, on funding directly, I say candidly that there are far too many organisations with their fingers in the pot. We have extremely good directly elected councillors, and they should be allowed to get on with the job of spending the money as local residents desire, rather than the money going through an alphabetti spaghetti of acronyms and quangos. Frankly, those not only add little value, but are sometimes destructive of the value the council could add. I ask the Minister to get rid of some of those organisations and to fund everything directly.
	Finally, on infrastructure, living in Southend sometimes feels like living on an island in the corner of Essex. We need to speed up traffic along the A127 and A13. The sea-to-sea rail line has been award winning, and despite the problems that National Express has had elsewhere in the eastern counties, I urge the Minister to consider awarding the contract and franchise to the existing management of the line, who have been absolutely fabulous. Given our road infrastructure problems, I would be very disappointed if the existing management of the sea-to-sea railway were not involved in the longer- term franchise for the line.

Shahid Malik: It is a pleasure to engage in this debate under your stewardship, Mr. Deputy Speaker. I congratulate the hon. Member for Southend, West (Mr. Amess) on securing the debate, which is on a subject that is important to him, his constituents and others living in Southend. I also congratulate the hon. Member for Rochford and Southend, East (James Duddridge) on his contribution.
	As I was sitting on the Bench earlier, a number of Ministers who have had the same responsibilities asked what debate I was here for. When I told them that it was on the regeneration of Southend, three of them said, I've done that in the past. That is testament to the hon. Gentleman's commitment to his constituents and their well-being-and that goes for the hon. Member for Rochford and Southend, East as well.
	It has been just over a year since we last had a debate about regeneration in Southend, and there has been much progress since then, as I saw when I visited in September. Since my visit I have been a big fan, as I was incredibly impressed. The hon. Member for Southend, West mentioned leadership, and I was impressed by the leadership and the partnership at work in Southend. I am very aware that partners in Southend have been working hard to ensure that the town becomes a thriving regional centre, with culture and commerce at its heart, and that it is seen as an exciting place to live, work and visit.
	One of the most impressive things I saw was the education hub of South East Essex college and the university of Essex in the town centre. Those developments have attracted multi-million pound investment and brought many benefits, including employment opportunities, supporting learning and raising skills levels, and transforming the street scene with more young people living in and around the town centre.
	I also note the comment made by the hon. Member for Rochford and Southend, East about counting. I am not fully aware of the issue, but I will get back to him with more information about the census. The issue was also raised by the hon. Member for Southend, West.
	It is not surprising to find that regeneration features strongly in the recent comprehensive area assessment for Southend, published last month. The assessment recognises the important role that regeneration has played in transforming the town and highlights not only the education hub but other developments such as Pier Hill, Hamlet Court road and the network of 11 children's centres, many of which are located in the central areas of the town that I saw on my visit.
	Importantly, Southend's regeneration has not simply been about bricks and mortar; it has also been about people, businesses and communities. It is about instilling confidence and encouraging people to join in and helping them feel in control of what goes on in their town. It is therefore important that we build on this success and exploit the potential within Southend. The local strategic partnership, Southend Together, has a shared vision to
	ensure Southend is a proud and dynamic city.
	Partners have been working together very productively to deliver that vision, and I was pleased to meet many of them during my visit last year. I mean that very sincerely.
	There are also significant opportunities to promote the advantages of Southend's location close to London and the 2012 Olympics; to become both a nationally and internationally recognised centre of educational and cultural achievement; to make maximum use of its physical assets including the seaside and the magnificent world record-breaking pier; and to promote Southend as a place to live and work, as well as to visit. It is very good news that Hadleigh Farm has been selected as the venue for the mountain bike events in the 2012 Olympics. I know just what an inspiring venue it will be, with an amazing view across the Thames estuary-Constable country at its best.
	I am sure that hon. Members will agree with me, however, that along with such opportunities, Southend, like many other seaside towns, still faces a number of real challenges, and the hon. Member for Southend, West alluded to many of them. It has significant pockets of social and economic deprivation, mainly centred in the Milton, Victoria and Kursaal wards, all of which rank in the top 3 per cent. of most disadvantaged wards in the country according to the indices of multiple deprivation.
	Southend has of course not been immune from the effects of the global economic downturn, as the hon. Gentleman highlighted. It has some of the highest unemployment rates in the east of England. The claimant count in November 2009 was 5 per cent. compared with 3.4 per cent. for the region. It was 50 per cent. higher than the same time a year earlier, although unemployment has stabilised in recent months.
	The hon. Gentleman was right to mention the airport. Certainly when I was there, there seemed to be a consensus among the regeneration leadership that it could be a good thing. However, he was right that it would be inappropriate at this stage for me to comment, given that it is likely to come before my Department and the Secretary of State in due course.
	The hon. Gentleman will be aware of the urban regeneration company for Southend, Renaissance Southend Ltd, which brings together all the public and private partners in the area and the central area master plan, looking at the potential for redeveloping the town centre and improving the commercial seafront as a visitor attraction and destination.
	The East of England Development Agency is supporting Renaissance Southend Ltd through core funding, as well as working with it and the council. It has invested more than £30 million in Southend over the past five years, most recently-I appreciate that the hon. Gentleman has already touched on some of these-on projects such as the £5 million redevelopment of the former Clifftown United Reform church into a state-of-the-art facility for the teaching, training, rehearsal and performances of the East 15 acting school students, and the new student accommodation and car park on London road, which promises to be a striking landmark for the town. It is obviously a bold design and certainly will be a talking point.
	Both hon. Gentlemen have talked about the need to ensure that there is one Southend-in the sense that at the moment the various funding agencies perhaps cause confusion. I hope that they will be reassured that the new single conversation, which has already begun between the Homes and Communities Agency and Southend partners on all aspects of housing, infrastructure and regeneration, will reduce some of the complexity.
	The HCA carried out a reprioritisation exercise in September 2009 for projects provisionally identified for funding in the Thames Gateway delivery plan. I am pleased to say that Southend did well out of that reprioritisation, with seven out of 10 potential projects placed on the high priority list for funding, which is testament to the hard work of stakeholders and the project teams. Six of those now have funding agreements in place or near to completion, providing more than £9 million of funding, in this and the next financial year, for a mixture of public realm projects and studies of development potential.
	Southend's role as a cultural and educational centre is being supported by partners in a number of ways. I am pleased to say that we have recently agreed to the merger of South East Essex college and Thurrock and Basildon college, which will help provide a wider range of curriculum and progression opportunities, further strengthening the education offer-something that is obviously critical given where we are in the economic downturn.
	Hon. Members will recognise Southend's aim to become not only the cultural capital of the east of England, but the UK capital of culture in 2013, with its recent bid Southend's Got Front. As the hon. Member for Southend, West mentioned, the recent opening of Chalkwell hall, the new home for Metal, will provide a low-carbon space that can be used as a power house for creativity in the community and far beyond, allowing artists to develop their talent and ideas.
	The City Beach project, of which the hon. Gentleman is aware, with public sector funding of £7 million, will bring urban design improvements to the central seafront and public realm, based on enhancing the promenade, improvements to the sea wall and the installation of architectural lighting.
	Improvements to transportation routes are important to the continued development of Southend. That point was well made by the hon. Gentleman. As was pointed out, a significant part of the borough council's plans is the work on Priory crescent and its junction with the A127 at Cuckoo corner-a pinch-point on the route to and from the eastern part of Southend. The Department for Transport has provided just under £5 million through the community infrastructure fund, or CIF2, taking the scheme through to completion by March 2011. Work on the Victoria gateway, which will provide improved pedestrian links between Victoria station and the town centre, will also start shortly. Both schemes should help to improve public transport prioritisation and through-route development of the south Essex rapid transit scheme. I also note the hon. Gentleman's point about c2c, which I will push in the direction of the relevant Minister.
	However, as we know, regeneration is as much about communities as it is about physical infrastructure. I would like to note some of the work seeking to improve the lives of those in the more deprived areas. We have allocated £1.6 million from the neighbourhood element of the safer and stronger communities fund to Southend-on-Sea. The programme has delivered genuine results, such as the small grant programme for local people developing schemes to support their residents, as well as neighbourhood wardens, who patrol the local area during daytime hours.
	Some £243,500 has been awarded from the social enterprise investment fund to set up the St. Luke's healthy living centre, a social enterprise aiming to improve the health and well-being of local people and create training, employment and social enterprise opportunities for residents. The local strategic partnership has also set up community voices, a series of free community engagement-focused events designed to give residents and businesses direct access to key agencies. The most recent event was themed Beat the Recession, and provided advice and guidance on a range of topics, from personal finance to dealing with stress.
	The hon. Gentleman also spoke about the pier and the redevelopment there. Wave 3 of the sea change programme was heavily oversubscribed. The sea change partnership, which is led by the Commission for Architecture and the Built Environment, which manages the programme on behalf of the Department for Culture, Media and Sport and its partner non-departmental bodies, had to make difficult choices among good projects. Written feedback on why the bid was unsuccessful has been given to Southend borough council. Wave 3 of the sea change programme takes us to the end of 2010-11, and it is too soon to make announcements on public expenditure beyond then.
	There is no doubt that Southend is a place with a very bright future indeed. However, we must ensure that the momentum is consolidated and built upon. We recognise that, with other places, Southend faces challenges, some of which have been made more difficult in the current economic climate. The Government and local partners have been actively working together to try to reduce the impact of the downturn on local communities and businesses.
	 House adjourned without Question put (Standing Order No. 9(7)).